Commodities Update 20

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Oil prices increase at the beginning of this week. WTI rose by 0.83 percent while Brent stepped up 0.91 percent. It seems as if oil prices recovered from the strong losses that occurred last week. Brent decreased from 51.50 USD to 48.00 USD.

There is no evidence for OPEC-oil production to extenuate. According to Ole Hansen, Saxo Bank, it will take even longer for the equilibrium to be reached, because the oversupply will rise due to Iran in the short run. Additionally, an interest rate hike in December seems more and more likely, which increases investor’s fear of market turbulences.

The evident weakness of China’s economy does not seem to influence oil prices. Even though imports decreased by 18.8 percent in October, compared to last year, and exports by 6.9 percent, China’s oil consumption increased by 9 percent.

Gold prices decreased sharply after Janet Yellen announced that US’ economic activity revealed a good development. Last week was one of the weakest weeks for gold prices this year. At the beginning of this week prices increased slightly by 0.06 percent. An expansion of the QE-program by the ECB could lead to an appreciation of the USD, which would make precious metals more expensive.

Copper prices reached a five-weeks-low with prices below 5’000 USD per barrel. This could have been triggered by Chinese im- and export data, as China demands about 40 percent of copper worldwide. Investors hope for supporting policies from Peking, which could induce stronger growth.