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Commodity Observatory

Wed, Nov 18 2009, 09:59 GMT
by BBVA Bancomer Team

BBVA Bancomer

Both OPEC and the International Energy Agency (IEA) revised upwards their oil demand forecasts due to improved perspectives regarding economic growth. These revisions counterbalanced the impact of higher than expected US inventories on the oil price, which has been in the 75-80 dollars range in the last four weeks.

Energy

The price of oil is currently around USD 77 per barrel. It has been now four weeks since oil prices remain within the 75-80 dollars range. US oil stockpiles rose 1.76mb while gasoline stockpiles advanced 2.56md, more than expected by markets. OPEC adjusted its oil demand for 2010 upwards by 0.75md per day due to higher growth perspectives. For the same reason, the IEA revised upwards its demand estimates for 2009 and 2010 (by 0.21mbd in 2009 and 0.14mbd for 2010). Supply forecasts were also adjusted. OPEC forecast for 2010’s non-OPEC supply was adjusted up by 0.36mbd. The IEA forecasts for 2009 and 2010 were increased by 0.13mbd and 0.35mbd respectively. According to the IEA, global oil supply rose by 0.64mbd to 85.6mbd in October and OPEC supply reached the highest value since January. Preliminary trade data for China shows strong growth of oil imports (20% y-o-y).

Agriculture

Sugar prices rose once again, following news on crop damage to India’s supplies from a tropical cyclone. According to US government sources, this year corn harvest will be lower than expected, US wheat stockpiles will be the largest in 10 years when the 2010 harvest begins and US soybean harvest will be the largest in history. They also expect South American production of soybeans to rebound. Chinese soybeans imports dropped for the fifth month in a row last October.

Metals

Chinese positive macro data provided support to metal prices and partially offset the impact of an easing in Chinese imports of copper and aluminium in October. Copper inventories monitored by the LME rose to the highest level since the beginning of May. Strikes in mines in Zambia and in Chile are providing support to copper prices.

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Published on  Wed, Nov 18 2009, 09:59 GMT

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