Crude
After a surprisingly sharp surge on Wednesday, the oil price fell quite significantly yesterday and the front-month contract on Brent is therefore again trading in sight of a five-year low. The comments of Saudi Oil Minister Naimi may have contributed to a gloomy mood; the minister said that both Saudi’s and OPEC would find it difficult, if not impossible to give up market share in favor of other producers. This week’s trading and Mr. Naimi’s comments however support our call that a high volatility in crude oil markets is likely to persist in the months ahead.
Base Metals
Slightly weaker China’s flash PMI results for December (HSBC) as well as continuing slide in oil prices have probably weighed on base metals prices this week. On the contrary, better than expected US industrial production data failed to provide more significant support to base metals prices on Monday.
Although copper price fell less than base metals average this week, our outlook for 2015 remains rather cautious and we think it could continue to decline in months to come. On the other hand, regional imbalances in aluminium market and possible turn of overall market balance into a deficit could slightly support aluminium price in 2015, though slide in oil prices (and possible lower energy prices) pose a risk to this scenario.
Chart of the day:
Crude oil and oil products will likely be among the worst performing commodities (from an investment perspective) in 2014…
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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