-Oil prices retreat. For how long?
-Iron ore, coking coal underpinned
-Thermal coal under most pressure
-Platinum supported


By Eva Brocklehurst

Average oil prices retreated in March after several months of rises. Brent and Tapis fell around 6% and are now US$110/bbl and US$115/bbl respectively. West Texas Intermediate dropped 2% to finish March around US$97/bbl. National Australia Bank analysts have noted that the spread between Brent and WTI is at the narrowest since July 2012. This is the result of the relative strength in WTI, while Brent prices were affected by less European demand and a surge in North Sea production.

So what is in store for prices as 2013 progresses? The analysts are optimistic. Technical and economic indicators point to demand being more robust compared with last year. Production is improving in non-OPEC nations, which should offset the reduction in supply from areas of geopolitical tension and help keep a lid on prices. The austerity measures in Europe continue and should also keep prices contained. WTI prices may be boosted by a drop in oil reserves at the US delivery point at Cushing. Hence the spread to Brent could narrow even further. Overall, the analysts see the price of WTI lifting to around US$103/bbl over 2013, while the price of Brent is expected to lift to around US$117/bbl.

Further down the track, Citi believes oil prices should keep falling, given the push to substitute natural gas for oil. Ongoing improvements in fuel economy could mean oil demand levels off sooner than expected. Citi analysts cite a shift already underway in the US where shale gas production is gaining pace. Higher prices, the removal of fuel subsidies and rising fuel economy mandates have all contributed to make gas more compelling. The analysts believe structural bull market of the previous decade was a result of surging global oil demand and consistent disappointment in non-OPEC supply, compounded by a collapse in Iraqi and Venezuelan production. The outlook for each of these factors has now reversed, reinforcing Citi's long term view that by the end of the decade Brent prices are likely to hover within a range of $80-90/bbl.

Back from the future and the rally in bulk commodity prices has also stalled. National Australia Bank analysts have revised