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Commodity Observatory

Tue, Oct 27 2009, 09:25 GMT
by BBVA Bancomer Team

BBVA Bancomer


The price of oil broke the USD 80 per barrel mark in the middle of last week and then receded slightly on Friday. The upward move was driven by the consolidation of recovery perspectives and by the weakness of the dollar. Copper prices also rose to reach values close to USD 6650 per ton, in spite of rising inventories.

IN DEPTH: see on page 2, “COMMODITY PRICES: FUNDAMENTALS WILL REASSERT THEMSELVES” about BBVA’s new commodity price forecasts.

Energy

Oil prices continued to move upwards reaching USD 80 per barrel for the first time since October of 2008, when the oil price was moving downwards amid the deterioration of the global turbulences. Reacting to the recent oil price moves, OPEC’s authorities said that production targets could be adjusted upwards in December, when the members of the cartel meet in Angola, to keep prices in the USD 75 – USD 80 range. OPEC’s compliance with current production targets has dropped from 80% at the beginning of the year to 64%. U.S. oil stockpiles rose 1.31mb million barrels last week and are now 9.4% above the 5-year average.

Agriculture

Agricultural commodities prices benefited from the macroeconomic environment, from higher oil prices and from renewed concerns with the impact of the bad weather in the US Midwest over grain prices. Wheat and corn prices are at the highest levels since June.

Base Metals

Prices moved significantly up this week helped by the announcement of an 8.9% y-o-y GDP growth in China in the third quarter. Despite the dynamism of the Chinese economy, metal inventories in total metal exchanges continued to expand in September. Copper stockpiles grew 13% m-o-m in September (the fifth monthly growth in a row). Zinc and Lead inventories expanded by 2% and 5% m-o-m respectively.

Precious Metals

Gold prices are holding up well above the USD 1000 mark as the dollar continues to lose value.

Published on  Tue, Oct 27 2009, 09:28 GMT


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This document was prepared by Banco Bilbao Vizcaya Argentaria’s (BBVA) Research Department on behalf of itself and its affiliated companies (each a BBVA Group Company) for distribution in the United States and the rest of the world and is provided for information purposes only. The information, opinions, estimates and forecasts contained herein refer to that specific date and are subject to changes without notice due to market fluctuations. The information, opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources believed to be correct by the Company concerning their accuracy, completeness, and/or correctness. This document is not an offer to sell or a solicitation to acquire or dispose of an interest in securities.

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