KBC Market Research Desk
KBC Bank
Crude
After the expiration of July contract on Brent, the new front-month contract (i.e. August) is trading above 64 USD/bbl today in early trading. In other words, yesterday’s oil price slide could be to a large extent attributed to the expiration of July’s contract. As regards the reaction to weaker than expected US data released later during the session, the oil price actually increased on disappointing US industrial production data as the dollar weakened.
An interesting piece of data was also released by the ICE on Monday. A so called Commitment of Traders report showed that net speculative position in Brent futures fell further last week mainly due to an increase in number of short contracts held by speculators. At the same time, number of traders holding short position increased quite significantly last week and was therefore well above its common historical level which signals that bearish mood among speculators may be growing.
Metals
Base metals prices fell by about 1.1% on average on Monday. The latest development of aluminium prices has been particularly interesting as not only that LME prices have been falling in recent weeks (see the chart below) but physical premiums have also been under pressure recently. This means that the pressure on producers of the metal has been mounting lately. On the other hand, let us recall that recent slump in prices could probably be to a great extent attributed to soaring production of the metal in China whose production has traditionally been resilient to deterioration in market conditions...
Chart of the day:
Aluminium price hit a fifteen-month low yesterday.
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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