Brent extended previous gains on Wednesday and the price of the front-month contract (ICE) was seen as high as at 94 USD per barrel (USD/bbl) level in intraday trading. The main reason was a slowdown in North Sea oil production. Meanwhile, the forward curve slightly flattened.
Regarding the EIA’s US weekly petroleum data, it showed lower than expected decline in US crude inventories. The most surprising was higher than anticipated built in gasoline stocks which, however, still remain below 5 year average (see the chart). At the same time, one should bear in mind the decreasing consumption of gasoline. Therefore, the report was, in our view, rather bearish for the price of oil.
LME aluminium outperformed the rest of the base metals complex yesterday and posted the largest daily gains in more than two months, while three month copper rose to 7400 USD per ton (USD/t) level.
Meanwhile, the front-end of the copper forward curve remained in mild backwardation as stocks of the red metal at LME are still well below mid term average, although the market experienced a significant inflow of the metal into South Korean warehouses in Busan and Gwangyang in recent months.
Chart of the day:
Despite the higher than expected built in US gasoline stocks last week, they have been below 5Y average in past two months.