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phonlamaiphoto/Adobe Stock

We should state from the outset that it’s not that energy costs are directly dependent on the oil price — very little electricity generation around the world, Saudi Arabia being an exception, is generated from crude oil.

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But with power making up to a third of the electricity cost structure, energy costs in general are taken as either bearish or bullish for the light metal depending on whether they are falling or rising strongly.

So the oil price slide — prices have lost around a quarter of their value since early October — is one of a couple of early indicators that support for aluminum price rises is waning.

Indeed, the corresponding strength in the dollar this year, coupled with recent oil price weakness, goes a long way toward explaining the aluminum price slide since the summer.

Source: Financial Times

Back to oil, according to Reuters, front-month Brent crude oil futures were trading at $65.88 per barrel yesterday, while U.S. West Texas Intermediate (WTI) crude futures were at $55.96 per barrel, both down about 0.5% from their previous close.

The reason isn’t hard to find.


Charles/Adobe Stock

This morning in metals news, Chilean state copper agency Cochilco again trimmed its average copper price prediction for the year, China’s state-owned aluminum producer Chinalco is looking abroad and oil prices are up for the second straight day.

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Copper Price Prediction Falls

Chile’s state copper agency, Cochilco, lowered its average copper price prediction for the year, Reuters reported.

According to the report, it downgraded its prediction by $0.03 to $2.97/pound.

Chinalco Looks Abroad

Amid challenges at home, the state-run aluminum major Chinalco is looking elsewhere to buttress its business.

According to a Bloomberg report, the global aluminum market is set to swing from a deficit to a surplus in 2019, which will put pressure on the aluminum producer (in tandem with rising prices of raw materials).

Bloomberg cites Chinalco’s deputy general, Ao Hong, who said the firm is looking into an Indonesian alumina project.

Oil Prices Rise Again

The oil price made gains for the second straight day Thursday, Reuters reported.

After exceeding the $80/bbl mark in September — its highest level since 2014 — the price has come off in the last six weeks.

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According to the report, OPEC is considering a cut of up to 1.4 million barrels per day next year to head off a further plunge in the price.