Crude Oil fluctuates, demand for metals weakens - Commodity Online

Oil prices fluctuated between gains and losses in European session as the situation in Japan has been contained. While fight in Libya continues, the market appears to have priced in all positives to prices. The front-month contract for WTI crude oil slipped to 102 before expiry today.

The more-active contract for delivery in May has also been trading sideways with a soft tone throughout the day. Gold and silver also move within narrow ranges. Base metals rebound but gains will probably be capped as China's final trade data in February was slightly disappointing.

According to China's Customs, imports of net imports of refined copper fell to 139.03 metric tons, the lowest level since October 2008. Both imports and exports fell with weak imports being driven by negative arbitrage between SHFE and LME prices, rising inventories in Asian LME warehouse and soft physical premiums.

Net imports for primary aluminum also halved January's amount while net imports for refined zinc fell to an 8-month low as imports were affected by abundant inventories and domestic production. China remained net exporters for refined lead.

Demand for oil remained strong in February. Net imports for crude oil rose to 5.19 mmb, up +2.2% from January and +7.8% from the same period last year, during the month. This is also the third highest level on record. For precious metals, the country's appetite was mixed.


While imports for platinum and palladium surged on both monthly and annual basis, imports for silver declined. Strength in PGM imports signal the bullish outlook for auto sector in China. Imports for silver fell -31.7% m/m to 246 metric tons but China remained a net importer for silver for 17straight months as exports fell to 56 metric tons, the weakest month since 2005.

Concerning economic data, UK's headline CPI surged +4.4% y/y in February, exceeding consensus of +4.2% and January's 4%. Core CPI jumped +3.4%, also exceeding both market expectations and January's reading.

The BOE is facing heightened pressure to increase interest rates as inflation has remained stubbornly high. We will see on Wednesday minutes for the March meeting. Policymakers are expected to be split on whether to hike, reduce and maintain current monetary measures. Separately, UK's budget deficit surprisingly widened in February with net borrowing rising to 11.8B pound, up +24.2% from 9.5B pound the same period last year.