Research Dept. News
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Monthly Report, num 328 - October 2009
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International review - Raw materials
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Oil and gold resume increases
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Crude oil price depending on weak dollar and recovery of emerging economies.
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Following a slight respite, oil prices again took on an upward path. Between August 20 and September 18 crude oil dropped by 2.8% although in the second half of that period the tendency shifted upward taking the price to 71.92 dollars a barrel (1-month delivery, Brent quality), thus accumulating a rise of 84.0% in the current year. This level was still below the 95.9 dollars in September 2008 but as of October it should begin to show year-on-year increases compared with drops in the final quarter of 2008.
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The Fed’s expansionist policy, Treasury borrowing and the persistence of the US foreign imbalance will continue to push the dollar down which will benefit commodities. The settling down of Chinese recovery and that of the main emerging economies, as well as the perception that the worst of the recession is over will have an effect in the same direction. With supply being able to meet increased demand, oil should remain at current levels with slight increases in 2010.
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Commodities ease price increases because of drop in base metals.
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Commodity prices have taken a break. The Economist index for commodities rose by a low 0.3% between July 20 and September 18 putting the increase for the current year at 22.4%. Gold and precious metals increased their advances because of the weakness of the dollar whereas base metals showed drops.
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In this respect, the recovery of world industrial activity should increase scrap production which forms an important supply of base metals. This would continue to moderate the Chinese boom in imports seen in the first half of the year although without breaking its basic strength in coming months.
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