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Research Dept > Economic information > Monthly Report > Web edition 20-6-13
Monthly Report, num 285 - November 2005
International review - Raw materials
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Oil prices provide some relief
Better-than-expected supply situation in United States sends oil below 60 dollars a barrel. Following notable increases in July and August and the great uncertainty in September due to the impact of hurricane Katrina, oil prices in October have given temporary relief. Evidence that inventories of oil and refined products are holding above expected and that the impact of hurricane Wilma in terms of oil supply would not be appreciable (and therefore that the risks regarding oil supply to the US market had been reduced) sent prices below the psychological barrier of 60 dollars a barrel for one-month forward Brent quality oil on average in October.
In any case, it should not be forgotten that current levels remain historically high and are even 20% above those reported one year ago. Furthermore, fundamental conditions in the oil market have not improved significantly. The supply/demand ratio remains very narrow and the trend in both variables for 2006 does not imbue much optimism. While it is expected there will be an increase of 1.8% in supply in the coming year, demand will grow by two decimals more at 2.0%.
Metals moderating but raw materials overall stand 11% more expensive than one year ago. Nor should we forget the trend in other raw materials. As opposed to oil, raw materials measured by The Economist index in dollars for October showed a growth increase of 11% year-to-year as against 8% in September. The main culprits for this increase were food raw materials and non-food farm materials whereas metals, which were recording a very strong upward trend, showed a slowdown in growth rate. Gold deserves separate mention as it came close to 470 dollars an ounce with more than 11% growth in the past 12 months.




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