Jonathan Barratt: Strategies to trade gold, crude, copper

In an interview to CNBC-TV18, Jonathan Barratt of barrattsbulletin.com discusses trading ideas of select commodities such as gold, copper and crude oil.

Below is an edited transcript of his interview. Q: Brent is at a seven-week high at this point in time. What do you think is keeping it so buoyant and what is the expectation in terms of prices in the second half?
A: When you look at crude prices they certainly have had a very good rally. If anything, expectations are that we are actually trading into some resistance. So if anything when I look at Brent, when I look at WTI, I feel that we do have some resistance. Given the comments from Ben Bernanke and Premier Wen, I think the markets just sort of want to take a little bit of profit. Q: What would you say Brent maybe capped at? Is USD 104 or USD 103.50 per barrel the cap?
A: When I look at Brent I think USD 104 per barrel is the cap. With WTI at the moment I think USD 90 per barrel is the cap as well. I do have more of a positive outlook for crude moving forward, but at the moment I feel we are looking for some consolidation to occur and as a result of that I would certainly be taking some profits on some long crude oil. Q: How forward and how positive would it be USD 110 per barrel or would it be worse than that? Are you looking at the last quarter of the current year or even earlier?
A: When you look at it, it all has to come down to the stimulus programs that we put in and also the geopolitical concerns that we have particularly in the Middle East and also those geopolitical concerns that we have in the North Sea. They will certainly help support prices there is no doubt about it.
I do eventually see prices for WTI and Brent trading higher. Brent possibly back to USD 110 per barrel, WTI I am looking for getting back to that USD 100 per barrel. But I do believe that is towards the end of the fourth quarter this year. We really need to see how those stimulus programs play out. At the moment you can see that a lot of energy is going into economic growth and that will see consumption pick up and as a result of that prices will trade higher. Q: Post all the news from China, how would you be placed on copper? How do you expect it to move?
A: Copper is a very interesting commodity at the moment. China is the number one consumer of the metal and when you look at Premier Wen’s comments in terms of how he is going to create more stimulus leading into the fourth quarter, you can see that the metal will be well supported. One of the angles at which we are focused on is not necessarily the demand for the metal, but rather the supply.
What we are seeing is that mining is up around 15%, but actual refined production is down and if that continues then we will see this market moving to a more of a deficit and as stimulus picks up, you would probably see an increase in the price of copper. On copper, we are close to it’s lows of around USD 7,500 and I wouldn’t be surprised to see it trade back to that USD 8,000 soon.