Oil prices rise, as OPEC’s decision is getting closer

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Tuesday’s Oil prices were a bit volatile, but now Oil rose again on expectations of OPEC’s output cuts extension. As Thursday is nearing, the OPEC meeting is giving a support to global oil prices. There were some losses earlier today in the session. After White House said it would sell off half of the country’s oil stockpile. But as it turned out, this intentions were not strong enough to impact the oil price seriously.

Brent crude LCOc1 traded up 7 cents at $53.94 per barrel at 1348 GMT (9:48 a.m. ET), after a low of $53.20.

U.S. light crude CLc1 was up 10 cents at $51.23.

The OPEC countries, onwards with Saudi Arabia, and other producers including Russia will meet on May 25. They are going to extend a pledge to cut output by 1.8 million barrels per day (bpd). The cuts might possibly go even deeper. And they will last at least until March 2018.

The cuts were initially agreed to last six months until the end of June. But as discussed later, it is decided that Oil market would gain better back up if the prolonged cuts last 9 months.

 

Kuwait

Essam al-Marzouq, Oil Ministed of Kuwait said today that not all OPEC countries and its allies supported a nine-month extension. So the producers would discuss this week precisely whether to extend output cuts by a six or nine months.

There are many sources which say that they predict a smooth meeting with a nine-month extension likely to be agreed.

“OPEC meets on Thursday amid increasing optimism that the production cuts agreed last November will be rolled over and most likely to the end of 1Q18,” Colin Smith, analyst at Panmure, said in a note on Tuesday, adding he expected a rollover would “likely deliver a significant tightening of the market.” (Reuters)

 

Early trade today

Earlier today, oil prices declined a bit, on the White House plan to sell off half of the nation’s 688 million-barrel oil stockpile.

The budget, to be delivered to Congress on Tuesday, is only a proposal. So it will not take the real effect in its current form.

“Congress needs to agree to this which is rather uncertain,” said Carsten Fritsch, commodity analyst at Commerzbank. (Reuters)

 

Allies in OPEC deals

 

Carlos Perez, Ecuador Oil Minister said OPEC and other oil-producing countries are going to discuss a six- or nine-month extension to output cuts and probably choose the latter.

“Six and nine months are both proposals on the table … we will support the majority, probably the nine months.” Perez told reporters after arriving in Vienna today.

When asked whether deeper cuts would be discussed, he said: “Not at this point, I don’t think so.”

Noureddine Boutarfa, energy minister of OPEC member Algeria, said OPEC was discussing a possible nine-month extension, with curbs kept at the same level as under the group’s existing deal.

“Right now we are talking about nine months,” Boutarfa said.

Khalid al-Falih also arrived in Vienna on today, but didn’t want to comment to reporters.

There were some comments among delegates that they do not expect major surprises. Everything is pretty clear so far.

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One-fifth of Mongolia to be opened for digging

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Mining industry executives expect new mining boom in Mongolia. It is going to start very soon. It will open about 21% of country’s territory. Which is more than one-fifth, in order to explore its mining potential.

Mongolia goes through financial IMF-led bailout. And it currently removed the main obstacle of $5.5 million which was affecting its economy. It was a Mongolian banking law, that had required big companies to refer their sales revenues from foreign investments through Mongolian banks. Later it made a proposal to explore wider area of Mongolian territory.

 

Reforms

 

Reform, followed by further steps, all in order to open the mining sector, would definitely see the industry & investment grow.

“It is an important thing for Mongolia as a whole. I think the reaction and the commitment you are seeing from the Mongolian government over the last two weeks to repeal this tax, it shows its firm commitment to really get the foreign investments going and particularly that is very much settled on the mineral exploration and the mining industry in Mongolia.” Andrew Stewart, CEO of Xanadu Mines said.

By some CNBC reports, Stewart also spoke about Xanadu’s flagship Kharmagtai project. Its location is 120km south of Oyu Tolgoi. And it demonstrates that Mongolia offers increasingly favorable odds for discovering significant copper and gold deposits. When compared to mature mining jurisdictions, for example Canada & Australia.

IMF data shows that the economy only grew 1 percent in 2016 from 2.4 percent in 2015.

 

Numbers

By exploration, and Mongolian government efforts given in the mining potential, the country can meliorate its economy. Rise its GDP and of course the economic security which follows. Dashdorj was said to have remarked that the landlocked country bordering China and Russia and among the top 20 countries by landmass needs to take the step to resolve economic woes that go back several years.

Encouraging exploration is crucial for the healthy mining industry. When government gives the effort in structural changes in the industry there exists a great platform on which country can establish its capacities.

 

Mongolia’s growth in 2H17 and 2018

Mongolia’s growth will definitely accelerate this year. Supported by these huge mining investments. Info are coming from Asian Development Bank and its 2017 Outlook report. The forecast says growth will accelerate 2.5% this year, but will be around 2% in 2018. Followed by the base effect of upsurge in coal production in 2017.

This is based on the assumption that investment in the second phase of Oyu Tolgoi mine will rise from $200 million last year to $1 billion in 2017 and $1.2 billion in 2018.

While Oyu Tolgoi is Mongolia’s highest profile mining operation, the country plays host to a number of the copper, gold and coal mines.

Mongolia is a country richly provided with mineral resources.  The Erdenet Copper Mine has been operating for several decades and the indications are that there is still a number of decades of mine life to come.

 

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OPEC, hedge funds and the Sistine Chapel

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The most important Events in the Market Today:

  1. Oil is extending rally as investors wait for OPEC meeting on Thursday
  2. Global stocks mostly higher as markets recover poise
  3. Dollar creeps up off 6-month lows
  4. British pound slides as U.K. threatens to quit Brexit talks
  5. Bitcoin tops $2,100 for the first time!

For further info on these subjects, visit: www.investing.com

 

OPEC story

The story begins in the summer of 2016. Mohammad Barkindo had met Ed Morse in the Vatican’s Sistine Chapel.

It was unusual encounter which led to a later numerous important events.

The chat between two of them, at an energy industry event held in the Chapel, has caused OPEC to reshape the way of doing its businesses. It changed the way OPEC deals with hedge funds. And as well its influence in global oil market.

Barkindo, having had to deal with an oil price slump of that time, told Morse that OPEC aims to understand the way financial players worked in the oil markets.

“It was at the Vatican that we first discussed the idea of OPEC reaching out to the financial players in the oil markets.” (Barkindo)

“The world of oil has changed, including the fundamentals and its dynamics. And so must OPEC.”

He said Morse helped in organising a meet up for OPEC officials with hedge funds at the end of 2016.

“We went further to break the Berlin Wall with tight oil producers and met them in Houston in March.” (Barkindo said for Reuters)

 

Khalid al-Falih and his team

 

In different locations and meetings, Khalid al Falih and his team held discussions with hedge funds. They also met top trading houses Vitol and Litasco in Vienna in November, before the previous OPEC meeting. (According to some non-official news.)

Falih’s predecessor, Saudi oil minister Ali al-Naimi, often took advice from oil market consultants, but also often gave advice to hedge funds saying: “Leave the market alone”.

Now the situation has changed.

“As the market got increasingly financialised, the Saudis and others at OPEC understood and accepted it is not just driven by fundamentals and decided it was worth engaging with those who move the market short-term.” (Reuters)

 

Whatever it takes

Observing the past two months, Falih has couple times used the phrase by Mario Draghi, from his successful bid to defend the euro.

OPEC will do “whatever it takes”, to reduce the oil glut, says Falih.

Hedge funds bought firmly into the oil market late last year. When it became apparent OPEC is going to cut production. They have heavily sold those positions in recent weeks, stalling a recovery in oil prices near $50 a barrel.

“It is exceptionally important for producers to understand the behaviour of financial market players and what they think about future price trends.”

This time OPEC will definitely do whatever it takes to achieve the kind of equilibrium, and stability in global Oil market.

 

 

 

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Next Week Forecasts

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Important weekly events (Short Recollection)

Friday was a day when Oil futures came to a four week’s high. The prices scored a weekly rise of more than 5%. And most noteworthy the optimism on upcoming production cuts rose the positive expectations and market movement. The cuts will be extended to next 9 months. Starting from June 2017 and entering the March of 2018.

U.S. West Texas Intermediate crude leveled up for 98 cents. Counted in percentage that is around 2%. It reached a price of $50.33 at Friday’s close. Observing the period of last 4 weeks, this was the highest price.

Later, the U.S. benchmark rose for $2.49. Which makes it about 5% up weekly.

Meanwhile, ICE Futures Exchange in London saw the price of Brent Oil at $53.61 a barrel by the close. The daily peak was even higher, at %53.82. Which was the unseen level since April 19th.

London-traded Brent futures gained $2.77 on their price. If calculated in percentage, it is the exact 5.2% for the week.

The production cuts will be extended to the next 9 months. Rather than the 6 previously agreed. There are signs of their possible deepening, but it is still not sure. We will definitely know on Thursday.

The fuel rose for 6% on weekly basis. June heating oil also finished at $1.582 a gallon, which makes it 3.7 cents up for a unit.

 

The upcoming Week

The economic events taking place in the week ahead will be very significant for global economy. Traders will all focus on OPEC highly-anticipated meeting. Where the major producing countries will decide on extending the production cuts.

 

Chronology of daily economic events which will impact the market next week:

  1. OPEC Meeting

2.Fed FOMC Meeting Minutes

3.U.S. Revised 1st Quarter Growth Data

  1. U.K. First Quarter GDP – Second Estimate

5.Flash Euro Zone PMIs for May

 

Upcoming week in Numbers & Data

Also worth mentioning, The American Petroleum Institute is going to publish its weekly report on U.S. oil supplies on May 23rd.

On Wednesday, May the 24th, EIA will release the weekly report on data about Oil and Gas.

Later, Thursday meeting is definitely the most important event of the week. The upcoming FINAL decision of OPEC and non-OPEC oil producing countries, about prolonging the outputs. Taking place in Vienna.

Finishing with Friday the 26th, when Baker Hughes will show some weekly reports on U.S. shale drilling, and numbers which put up close the U.S. oil production.

Focus is set directly on Oil prices, and long-term Oil market stability, as an aim for global participants.

In conclusion, the upcoming week will be a bit tense, certainly agitated, interesting to observe, inspiring to comment on. And for sure challenging for all the main market participants. And all the traders and investors who hold their stakes in the market and are waiting for the concrete outcomes.

 

 

 

 

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A Brief summary of market movement this week:

 

Wednesday, May the 17th was the day when U.S. stocks felt the worst decline of 2017. The world’s top investors survived huge risks and have lost the amounts of money, due to reports that came out about President Trump, and the market movements which followed.

Observing the indexes, The Dow definitely had the worst story. Speaking of, it have lost 370 points, or 1.78%. While the NASDAQ ans S&P 500 also declined for more than 1,5%. The non so likable thing, is that the three most important U.S. indexes finished the week lower. In negative.

Gold futures 2% up

Meanwhile, investors have found their ”way out” of the bad Wednesday, relying on gold. And piling their money in safe assets.

Most noteworthy, the current political drama is happening in Washington. The President Trump’s bad branding which is forthcoming, put some doubts on his Politics, ideas and plans for the future steps.

Gold futures gained about 2% for the week. Which makes it the very best performance of this precious metal in 5 weeks.

 

Oil prices; real positive expectations

Speaking about the Oil prices, they were oscillating around 50$, gaining levels of 53.30 and a bit more, amid expectations that OPEC is going to extend the cuts. Crude futures followed the levels of 50$ at Friday’s close. The rising expectations  for OPEC to prolong the supply cuts is leading prices up. And it will have its greatest impact after May the 25th.

Noureddine Boutarfa  Algerian Energy Minister, said that all the ally OPEC and most non-OPEC countries support the output cuts. So they would likely impact the market, and push the OIl prices up.

 

 

Sterling hits highs  

 Thursday was the day when pound of sterling survived a mini crash against the dollar, falling to the level of $1.2888. This move was not so expected, because in fact it is not relied to any economic event. Or any important market data. But the dip in pound was very brief. As GBP/USD later recovered.

And reached the level above 1.30$. Which was definitely the highest since September. This impacted the markets, and the investors pockets, and later it showed that the UK retail sales went up more than expected in April.

 

The dollar drops

The U.S. dollar index fell by more than 0.70% on Friday.

The dollar shakes are the most important ones. Political drama happening in U.S. had affected the market during the week. It actually erased almost all the earnings brought by President Trump’s election. The economy is throwing a doubt on President Trumps ability to reform the policies. He promised to deliver the reforms on pro-growth economic agenda. Which is including deregulation in financial markets and the tax reform also.

 

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Saturday: Donald Trump’s Visit to Saudi Arabia; Ryadh CEO forum

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Firstly, Donald Trump is visiting Saudi Arabia this Saturday. The Saudi Aramco is going to conclude deals with 12 United State’s companies during this visit.

Secondly, Saudi Aramco plans to push and develop the local workers and manufacturing in all the possible ways. According to sources, this is part of Saudi Aramco’s plan to develop their operations in different areas. They plan to make deals with Oil companies, etc. Schlumberger, Halliburton, Baker Hughes, and Weatherford.

Thirdly, amid these plans, Aramco also intends to conclude agreements with other important companies, among others even: General Electric, National Oilwell Varco, Nabors Industries and Rowan Companies.

Fourthly, Reuters reported that when trying to reach Aramco and ask them about this subject; no one was available to comment.

 

Aramco’s plans dating from 2015

 

Following, IKTVA programme was launched in 2015 by Saudi Aramco. The idea of this programme was to double the amount of ”local produced energy related” and all similar goods to 70%. The year for this aim was 2021.

Furthermore, observing the past periods, Aramco cooperated with U.S management companies. They were covering the important projects which collided U.S. management and Aramco operating parts. The aim was to upgrade the Oil potential and develop the oil businesses in country.

“The upcoming partnerships will boost bilateral investment towards localisation.” (Reuters)

 

IKTVA closer

Aramco signed deals with drilling firms Rowan and Nabors Industries to establish joint ventures under the In-Kingdom Total Value Add programme. This happened last year, due to Aramco’s idea to develop this programme at the high levels.

IKTVA  is going to help in developing 500,000 jobs for Saudis. Both directly and indirectly, connected to the everyday operations.  

In forthcoming period Saudi Arabia is planning to change structure of its economy, in a way. It wants to diversify the economy, and widen its spectre aiming not to rely only on oil exports. Aramco will mainly participate in these massive projects. It is a main part of Vision 2030 economic reform drive.

The Engineering companies who support Aramco will sign these agreements too. Some of which are: KBR and Jacobs Engineering, as well as McDermott and Honeywell.

 

Saudi-U.S. CEO forum

This Saturday in Riyadh, the main event which is taking place is an inaugural Saudi-U.S. CEO forum. Most noteworthy, several important deals will be signed. Covering the areas of: defence, electricity, oil and gas, industrial and chemical sectors.

The new documents, in form of licences will be signed; giving the U.S. companies rights to operate in Kingdom, and that way have their power diversified on bigger theritory. And at the same time, giving them the power to influence Saudi’s energy market.

 

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Vessels with U.S. Oil en voyage to Asia; as OPEC measures extending cuts

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TOP 5 events in Today’s Market:

  • More Trump drama as White House turmoil deepens
  • Dollar struggles to recover from worst day in almost a year
  • Global stocks extend slump amid Trump jitters
  • Oil slides as investors weigh U.S. drilling, extended OPEC cuts
  • British pound rises above $1.30 for first time in 8 months

For further info on these subjects: www.investing.com

 

Cargoes:

According to current news, nearly 8 tankers are now en voyage from the U.S. to Asia. The one of them is carrying a cargo of Southern Green Canyon oil. Which japanese refiner Cosmo Energy bought. The other carries Alaskan North Slope cargo which is expected to come to Asia in about eight months.

The United States drillers are using the favorable prices to sell their Oil and that way they are strongly affecting the market. It is making OPEC less powerful to impact the global Oil market. The next week is crucial for Oil prices and movements in Oil market, because OPEC is going to meet in Vienna on May the 25th.

The market members, and all the OPEC allies are trying to leave the oil output at a current level, but the U.S. drilling is constantly affecting all the market happenings. Their ”relatively cheap” prices have buoyed exports going to Asia.

 

The forecasts for further U.S. Oil output:

U.S. Oil is expected to gain a quantity of 1000000 bpd, with most of it going straight to Asia. U.S. crude oil exports already came to a level of 1.09 million bpd. Observing the recent drilling (period of past few months) those are the levels highest on record according to U.S. government data. In case these amounts remain elevated, it can happen that they come over the 1.2 million bpd. 1.2 million was the February’s amount.

“We expect that momentum to continue when Dakota Access Pipeline opens, and as more Permian production hits Corpus Christi docks.”  (Sandy Fielden, director of oil and products research at Morningstar said) (Reuters)

Based on EIA info, United States Oil production rose for 10%. Which shows that levels of 9.3 million bpd are serious levels, and that if the production goes further, OPEC’s role in the global market will be really questioned.

 

Tempting Arbitrage:

Wednesday(17.05.) was the day when U.S. crude touched a 6-week high. It Immediately affected the traffic going to Asia; It shows as an possible extension of U.S. exports finding their way to Asian customers.

– “Early May spot prices showed both Brent and Dubai trading at around a $3 per barrel premium to Brent and WTI Cushing, which is an open window,” said Fielden. (Reuters)

Bahamas-flagged Suezmax is carrying Alaskan North Slope crude oil to Asia. This is based on the Vessel tracking data. Half of this crude is sold, half is unsold. (Reuters)

In the meantime, the Cosmo Energy has an Aframax vessel Almi Star with 300,000 barrels of Southern Green Canyon crude and Domestic Sweet Blend outside of Houston. Later it is picking up for further 300,000 barrels of Maya crude at Dos Bocas, Mexico.

This ship will go through the Panama Canal. Afterwards it will transfer crude to a larger Suezmax vessel loaded with 400,000 barrels of Mexican Maya crude for a voyage to Asia.

When asked to comment on this subject, The Suezmax P66 refused to comment.  Actually they did not answer the e-mail on this, while the Cosmo Energy refused to comment.

 

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Copper Price Peaks Higher in SHFE

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Economic Calendar Today:

  • United Kingdom Average Earnings Index + Bonus rose to actual 2.3%, while forecast was 2.2%
  • UK Claimant Count Change. It came to 25.5K while the expected was -3.0K
  • European Consumer Price Index (CPI) y-o-y rose to actual 1.9% while the expected was 1.8%
  • United States Crude Oil inventories at -0.930M, while the forecast was -2.333M

Inspired by www.investing.com

 

Morning Trade on SHFE

Amid expectations of increased Chinese demand and a weaker dollar, copper prices on the SHFE grew higher during Asian morning trade on May 17.

The most-traded July copper contract on the SHFE rose 210 yuan ($30.48) to 45,380 yuan per tonne as of 03:33 BST. Open interest of the contract was at around 216,944 positions on Wednesday morning. (Metal Bulletin)

Stronger demand has seen copper prices well backed-up this morning.

Shanghai copper premiums went up this week, because of a rise in buying interest from traders. As well as limited availability for authority and nearby bills of landing.

In addition, major Chinese copper producer Jiangxi Copper said on Tuesday that the country’s copper demand rose 22% month-on-month in March to 822,500 tonnes. Mainly driven by the property market and air conditioner sector.

 

Economic data

US April industrial production rose 1.0% month-on-month – the strongest monthly gain in three years.

“The data pulse overnight was robust, but market moves were more cautious, with US interest rate expectations trimmed and the dollar remaining under pressure,” (ANZ Research)

The dollar index was 0.13% weaker at 97.97 as of 04:00 BST on Wednesday morning.
Market is keeping eye on China’s One Belt One Road (OBOR) policy, though funding restrictions remain a key concern.

“Due to funding constraints, we do not expect OBOR opportunities to become meaningful over the next few years for China. Other than perhaps in very few selected sectors like railway equipment. We believe that, for investment demand, investors should focus on domestic stimulus policy which is far more influential on sectors including resources, materials, machinery and contractors.”  (M.Lynch. Research)

LME stocks

Beginning with LME copper stocks, they fell in today’s trade  by 2,650 tonnes to 322,500 tonnes. FIrstly, deliverable copper stocks at SHFE warehouses rose 799 tonnes to 72,742 tonnes yesterday.
Secondly,  losses in the SHFE-LME arbitrage held at around $90 per tonne. But some buying interest remains. Traders are more active in buying in order to deliver long-term tonnages.

Other base metal contracts

Observing the The SHFE July aluminium contract, it rose 0.36% or 50 yuan per tonne this morning to 14,015 yuan per tonne. Later, the SHFE July zinc contract gained 0.92% or 195 yuan per tonne to 21,505 yuan per tonne.

When considering the SHFE June lead contract, it slipped 0.13% or 20 yuan per tonne to 15,780 yuan per tonne. The September nickel contract rose 60 yuan or 0.08% to 76,660 yuan per tonne. Finishing with Tin, it’s contract was 1,050 yuan or 0.74% higher at 142,050 yuan per tonne.

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West Texas drillers could weaken any OPEC agreement on extending the cuts

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All the Oil producing countries which have a deal with OPEC, along with Russia, can extend their deals. But at the same time this will be a green light for United States oil producers.

If the price oscillates following levels between $50 and $60, these are the great news for the U.S. oil drillers. They will gain profit on way broadly group of drilling sites. OPEC’s new deal could speed up the market rebalance. Rather, the numerous U.S. shale drillers could also release bigger amounts to surpass OPEC’s price gains.

Mainly the market analysts wait for oil price to rise close to $60, or even $60 by the end of the year.  But the prices are not expected to climb much higher.

“Basically U.S. supply is coming on faster than we anticipated. Now you have a higher inventory level to begin with, and a slower decline. That means in our view, prices are likely to be lower on average.” (Francisco Blanch, Bank of America Merrill Lynch.)

“The Brent crude will come to average $54 per barrel this year, from an average $61 per barrel. ”

He doesn’t expect much of an increase neither for 2018. The Brent will probably gain the price of  $56 per barrel, versus his previous forecast of an average $65.

 

Different opinions

Ed Morse from Citigroup said he thinks it would be a way better if the OPEC agrees on a deeper cuts.

“I think this market will re-balance itself very quickly. The extension alone should result in deeper cuts.”

Deeper cuts would mean an “invitation for cheating” and “a sign of desperation in markets.” He explained that the re-balancing is already happening.

On contrary, Blanch said: “I think it’s pretty risky to deepen the cuts when they’ll be losing market share to shale. It seems to me that Saudi, Russia, and even the U.S., everyone needs oil price leveled at $60. The problem is, that by the laws of nature as well as of the economy, you can’t have both the quantities and the prices.”

Morse: “We don’t think U.S. production is going to stop the re-balancing of the market this year. It’s not enough to counter the cuts that are in place, particularly if they’re being extended.”

“We think next year will be more problematic. The shale drilling will accelerate and U.S. shale alone could meet the new demand in global growth.”

 

U.S. drillers

IHS Markit expects U.S. shale to grow by 900,000 bpd by the end of 2017. By the end of 2017, or entering the early 2018 the U.S. will be giving the record amounts of oil. Based on some U.S. government reports, their production rose to 9.3 million barrels in previous weeks.

“You can certainly say a lot of shale today will be competitive between $40 and $50 a barrel. The question mark is what’s going to happen with costs. We really think the costs this year in the Permian will go up 15 to 20 percent.”  (Daniel Yergin vice chairman of IHS said. “Rising costs will temper activity somewhat.”

Yergin stated that shale is now at medium cost production.

Permian, West Texas

Permian is currently the most active shale. But drilling could open up Eagle Ford in Texas or Bakken in North Dakota, following the upsurge in prices.

“Other plays still remain on the sidelines in this $50 environment. When we were growing at a million barrels in the U.S., it wasn’t Permian. It was Bakken and Eagle Ford.” (Helima Croft, RBC)

“The other thing about shale is it has a very high decline rate. The shale did come back stronger. Rigs are returning and for now it remains largely a Permian story.”

Analysts have expected the market to get a backup from the summer driving season. So far, U.S. gasoline demand has been softer than expected.  That could definitely impact the market, and it should see higher prices this summer .

 

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Metals trade today: LME & International Economic Events

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LME Today:

Metals prices on the LME slightly declined during morning trade today. Prices were down for an average of 0.6%.

Recollecting the positive Monday, that had closing prices up for about 0.3%. Nickel had a fall of 1.7%, but the average gain would have been 0.6% led by a 1.2% rise in aluminium price.

Firstly, spot precious metals were up for about 0.4% this morning. Gold prices are up 0.2% at $1,233.50 per oz, the rest are all up 0.5%. This comes after a mixed day’s performance on Monday when palladium prices dropped 1.1%, silver and platinum prices were up around 1.1%, and gold prices were up just 0.2%.

Secondly, observing morning trade in SHFE, copper and aluminium prices were a bit up, with copper prices at 45,220 yuan ($6,555) per tonne.  Other base metals complex are down an average of 0.8%. Spot copper prices in Changjiang are up 0.1% at 45,120-45320 yuan per tonne, while the LME/Shanghai copper arb ratio is weaker again at 8.10.

International Markets & Main Economic Events

Thirdly, Brent crude oil prices are up 0.3% at $51.92 per barrel. The market oscillates on a likely OPEC deal extension. The yield on the US ten-year treasuries is little changed at around 2.33%.

Equities on Monday were firmer, the Euro Stoxx 50 closed up 0.1% and the Dow closed up 0.4% at 20,982. Asia has generally seen follow through buying interest this morning with the Nikkei and ASX 200 up 0.2%, the CSI 300 is up 0.1%, the Kospi is up marginally, while the Hang Seng is bucking the trend with a 0.3% decline.

If we have a closer look, the dollar index is showing weakness again.  It is now leveled at 98.75, having seen a recent high of 99.89. For now the 2017 trend is to the downside, with recent lows at 98.54.

Following, the euro is now stronger at 1.0994, it looks well placed to push higher. Also the Australian dollar at 0.7425, seems to push higher. While the sterling and the yen are flat. Sterling at 1.2912 and yen at 113.49.

Economic data

Japan’s tertiary industry activity slipped 0.2% after a 0.2% climb previously.

later there is data on French and UK CPI and a host of other UK price data and leading indicators, Italian and EU GDP, German and EU ZEW economic sentiment and data on the EU trade balance. US data includes: building permits, housing starts, industrial production, capacity utilization rate and mortgage delinquencies – see table below for more details.

Chinese infrastructure projects

President Xi Jinping’s oath of $78 billion worth of financing for infrastructure projects, indicates the One Belt One Road plan is continuing.  It should be long-term backup for metals’ demand. This affected positively almost all the metals on Monday. But if that will be further trend, we will see soon.

 

Other Base Metals

Nickel started to fall yesterday, while copper and aluminium were showing some weakness this morning. Zinc and lead prices are looking more fragile. Today’s lead prices setting a fresh low at $2,092 per tonne. Unless buying emerges soon, the path of least resistance looks set to remain to the downside.

 

Precious Metals

Most of the precious metals are more solid, their recent price weakness appears to have induced agreement hunting.

Except palladium, where resistance above $820 per oz. It seems to be acting as a cap and lack of upside progress is encouraging profit-taking.  Seems like silver and platinum have currently looked oversold.

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