Oil down, whilst gold price increases

Published: 3 May, 2012 14:49

Oil prices have, for some time, slowly declined from previous peaklevels, metals however, is rising continously. This is simply the summary of
the commodity market today, and there is no indication that any major change will happen in the near future.

Increased oil production – Oil price still high

Oil prices are slowly falling and turning downwards. This includes both WTI- and Brent oil. On behalf of the Brent oil, the turnaround in April 2012 was the first since December.

This all depends on a variety of causes, one of them being the increased production. Within OPEC, there has been an increase by 305 000 barrels per day in April. This is an increase by 1 percent compared with March, and represents a total production of 31.4 million barrels per day.

Nigeria is also investing in increased production of crude oil in the long run. By 2020, the capacity will increase to as much as 4 million barrels per day. This should be compared with the country’s current production of approximately 2.1 million barrels per day. The country is also investing to increase their oil reserve, a backup, which is planned to land at 40 million barrels, an increase of about 3 million barrels from the current reserve.

Information about these plans is considered very safe when delivered by Nigerias Oil Minister, Diezani Alison-Madueke. The price of petroleum however, is historically high, despite the latest decrease. This is dependant to the tight global market conditions and the political concerns of many areas of the oil industry, not least the concern about Iran and its policy. However, the financial turmoil in Europe has caused a decrease in Oil prices. If there is a slowdown in the economy, demand will decline rapidly.

Metal prices are increasing

Metals, especially gold, has no slowdown in sight and again, increasing market prices have been reported. Gold has gone up $2 per Oz and it is again a financial turmoil, which is thought to contribute to the steady rise. Right now it is mainly the dark clouds over Spain that creates insecurity.
The Euro has slightly been lowered, and is driving interest to ensure investment in the form of commodities. Analysts are convinced that price levels for gold will remain over 1600 U.S. dollars in the foreseeable future.

One of those who believe this is for example Alexanra Night at National Australia Bank in an interview in Bloomberg News. Copper has also taken a significant step forward in the pricelist. This is due to the decreased of copper stocks, both in Shanghai and London. The range is not likely to improve in the near future, wich is promising for a continued high price.

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