Commodities Update 28

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Although the sanctions for Iran were reversed, the oil price kept falling. Iran announced to supply oil and gas carefully and observe the price development intensively. The latest low of WTI, as well as Brent, was immense. WTI fell on USD 28.36 and Brent on USD 27.67. These levels marked the lowest price since 2003.

An even higher supply for oil does prevent a further recovery but would have no influence on further decreases, according to Commerzbank’s analysts. Most of Iran’s oil production factories are out of business since 2012 and have to be renewed. Iraq and Libya needed about 12 months to reach their old production level. This fact could be used to evaluate Iran’s recovery time.

While a few bad news from the US-economy depressed equity markets, the gold price could increase up to USD 1.100. However market participants doubt that the FED would further increase interest rates soon. The FED confirms that the strong US-Dollar and low oil prices eliminates the improvement of the employment market. Bloomberg noted a further gold inflow of 4.4 tons in the biggest Gold- ETFs.

The base metals market did not copy the dive in the oil price. Reason for the stable prices could be a calm situation on China’s capital markets. China is known as the biggest consumer of base metals and asks for 40 roughly percent annually. Because of increasing production volumes Barclay’s analysts are expecting a light decrease of copper prices in Q4/2016. Therefore Barclays forecasts were reduced from USD 5.625 to USD 4.350.