Commodity prices in 2013: volatile markets offer chances of return

In 2012, the commodity prices were influenced by many parameters.
Among others, the debt crisis in the euro zone was responsible for uncertainness.
Moreover, there were concerns about the global development of the business cycle since, besides in the industrial countries also in the emerging markets, especially in China, there has been an economic cooling.

A good example for the up and downs of many commodity prices in 2012 is the oil price. At the end of 2011, one Brent barrel (about 159 litres) coming from the North Sea still cost 107.58 US-dollars. Within a few days, the price increased to almost 130 US-dollars. The reasons for that were measures concerning the liquidity taken by the ECB and the geo-political development especially in the Middle East. But afterwards, the crisis in the euro zone and the weak economic development in the USA stood at the core. The oil price decreased to less than 90 US-dollars. In late summer, the central banks were responsible for a repeated change of the trend providing confidence by easing the monetary policy. At the end of the year, the oil price was at a bit more than 110 US-dollars again.

Development of oil hardly predictable

For the next months, analysts expect a relatively stable level of the oil price. In favour of this are the weak global economic environment and the low demand being connected. In the course of the year, the economic cycle could regain momentum which could lead to an increasing oil price, too. But the growth potential stays limited for the foreseeable future. Moreover, there are risks that could lead to the opposite direction. Thus, this volatile market stays very interesting for trading with binary options.

In the medium term, the USA still possess great stocks. In addition, the Energy Information Administration (EIA) reckons that oil supply and demand will be balanced in 2013. In the medium term, there is also a consistent relief with regard to the supply in the offing. The reason for this are new conveyor techniques making it possible to extract oil from dense and hardly accessible rock formations. However, geopolitical risks may lead to high deviations of the oil price for a short time because the Middle East still is the region with the biggest output by far while the relatively volatile West Africa becomes more and more important as a producer.

Metals are developing inconsistently

Also with other commodities the lately growing economic concerns have left their mark. For example, since the middle of September, the aluminium price has fallen within two months by about eleven percent. Especially the Chinese economic cycle is responsible for this decline. China’s percentage of the worldwide aluminium consume is about 40 percent though the growth in China has slowed down.

There are also similar developments with other industrial metals, for example with copper
or zink. These markets are often relatively small so that already a rather low increase of the manufacturing capacity could lead to a decline in prices. However, unexpectedly good economic data from great consumer countries could also lead to a completely opposite development.

With precious metals in contrast, other considerations do also play an important role. In generally uncertain times, many investors flee towards these assumed safe resources. For this reason, in 2012, there were relatively high bull movements with silver, gold and platinum. Due to the fact that the monetary policy of many central banks stays eased while the economic prospects remain uncertain, the trend of buying precious metals may continue in 2013, too. Experts see further potential of price advances here. However, for a short time, there can consistently occur up- and downward amplitudes of the exchange rates. Thus, there are also good chances for binary option traders in the offing.