Low oil prices, for the moment

Oil has halted its upward trend. Between 20 August and 20 September, the price of crude fell by 4.5%, dropping to 109.10 dollars per barrel (Brent quality, for one-month deliveries). Oil is therefore 1.9% above its level at the start of the year and 2.9% cheaper than one year ago.

The increase in production by Saudi Arabia, the world’s largest oil producer, and the imminent release of strategic US reserves pushed down oil prices, offsetting the appreciation caused by the conflict surrounding Iran’s nuclear programme.

Volatility is high, with Saudi Arabia trying to strike a difficult balance between preventing excessive appreciation that affects demand in advanced economies, its main trading partners and, at the same time, attempting to avoid open conflict with Iran, which is pressurizing against increasing production.

The trend in the rest of the commodities was marked by the change in direction of metals, with the CRB index rising a meagre 0.9% between 20 August and 20 September.

Base metals picked up strongly from their sharp falls of the previous month. Iron was down 4.2% after having lost more than 26%, while copper was up 11.1%. Aluminium, affected by the ups and downs of oil prices due to its energy-intensive production system and speculative components, rose by 17.1%, the same gain as for nickel. Boosted by the Fed’s quantitative expansion, precious metals also rose. Silver was up by 23.5% and gold by a more moderate 7.4%. Among foods, wheat increased by 5.2% and coffee by 6.1%

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