Oil and energy prices have been mildly positive in electronic trade today, still hovering around $89.50/bbl while Brent remains held up above $91.5/bbl. The International Energy Agency (IEA) today released their Monthly Oil Market Report, the last of the big three monthly reports to come out (following US DoE and OPEC), showing that the exceptional cold weather in Q4 and a diesel shortage in China has been pushing prices above the $90/bbl level this month. The IEA revised higher their global oil demand, thanks mainly to the OECD North American region, up 130 thousand barrels per day (bpd) to 87.4mbpd for 2010, and up 260kbpd to 88.8mbpd in 2011.
At the same time, global output increased in November by 0.4mbpd to 88.1mbpd, due mainly to increased output from non-OPEC regions including Canada and Kazakhstan. OPEC output meanwhile was said to have held steady at 29.2mbpd. Attention continues to focus on tomorrow's OEPC meeting in Ecuador, although expectations are for no changes after the cartel's Secretary General El-Badri said production quotas could be raised if the fundamental backdrop warranted a price above $100/bbl, the implication that the current high prices are not founded on such underlying fundamentals.
The precious metals complex is underperforming slightly Friday, although gold is effectively flat at $1,390/oz. This represents a $50/oz sell off from its record high at the beginning of the week, as some renewed risk appetite today moves cash away from all safe haven plays. The world's oldest coin maker, the UK Royal Mint, said that sales of their popular gold sovereign coins (the equivalent to the US American Eagle) have surged over 400% this year, as consumer demand increased in line with the broader investment markets. The mint said November was the busiest month they have had in their entire history.
In contrast to the precious complex, base metals have been making fairly decent gains today despite the PBOC rate hike, after the Chinese customs authority showed the country imported around 29% more copper in November than October at 351,600 tonnes. This helps alleviate concerns that last month's slump in imports was a one off phenomena and not an intrinsic shift, as the country begins to slowdown its rapid growth.
The ongoing energy saving measures impacting domestic aluminium production led to the second straight increase in imports in November of 76,300 tonnes, although it is still worth noting that this is around 37% lower than last year's figures. Traders are reporting that prices for iron ore above $170/tn have brought about a pickup in trading action on both the buy and sell side today, with caution that the recent price hike may have been a temporary spike alleviated as the metal holds firm.
In the agricultural sector, the US Department of Energy is set to publish their current supply estimates for grain, oilseed and cotton today, with expectations of downward revisions to inventories across the board due to increased demand and bad weather. The Chinese data overnight showed the country imported 5.48 million tonnes of soybeans in November - a 47% increase on the previous month and around 30% higher year-on-year.
