More metal will become available and the spreads are reflecting this expectation. |
New money may not enter the markets with the same vigor as has been the case in the past, especially if growth in the U.S. shows signs of slowing on the back of steadily rising interest rates. |
No doubt, the relative easing in geopolitical tensions weighed on the markets yesterday. The Saudi incident, which was somewhat over-exaggerated on Friday, got discounted in calmer fashion for what it was -- a non-event in terms of supply, although a briefly unnerving one at that. |
Prices could rally in the event of such an announcement [on Iran], but then come off shortly thereafter once participants realize that despite the consensus, hard work still lies ahead. |
Sometimes one comes across an especially odd trading day when nothing much makes sense. Yesterday's session was a case in point, with the action in the natural gas complex being particularly puzzling. |
Support levels on crude...should hold at least through today, as participants will be reluctant to go home short heading into the weekend. |
The copper rally has surprised us all, even the die-hard bulls among us. |
The growth picture looks very solid. We're not seeing any slowdown at all in any of the major metal-consuming countries, despite higher energy prices and higher interest rates. |
The Iranian situation remains on top of the heap in terms of market concerns. |
The markets are picking up the scent of a compromise in the offing. |
The Nigerian news would typically not get much of a market hearing given the modest amounts usually involved and the relatively short-lived nature of disruptions. However, given the potential crisis with Iran, markets are moving higher on just about any news that entails a possible supply pinch. |
The Nigerian problem, it seems, is transforming itself from a pesky, on-again, off-again, bottleneck to one with more staying power. |
The prolonged drama probably explains why markets have not done much of anything in response to the news. Participants have perhaps concluded that things will take a lot longer to come to a head -- if they do at all. |
The situation, therefore, still remains serious, with the next few weeks proving pivotal. We still think, however, that an eventual compromise will be reached, as both sides will be hard pressed to carry through with their threats. |
The strike in Nigeria, if it does come to pass, will have a limited price impact and could very well follow June's pattern, where a sharp spike after the strike announcement was followed almost immediately by sizeable selling, |