Copper and oil top picks in 2012: Scotia

Copper will be the top performing base metal in 2012, while oil prices should stay near current levels, says a new report from Scotia Capital Markets.

Patricia Mohr, Scotia’s commodity market economist said copper is in a supply ‘deficit” and will remain so next year, even with a 6% increase in global mine supply.

She said world mine output has increased only 1.1% per annum from 2007 to 2011 in the face of rapid demand growth in China and ‘emerging’ Asia.

“Much of the recent pickup in refined copper imports into China has reflected stockpiling by property developers for use as collateral for bank credit,” he said. “However, China’s fabrication demand should strengthen again next spring, with prices surging back to US$4.”

West Texas crude prices, meanwhile, are expected to range between US$95 a barrel and US$100 in 2012, not far off today’s price near

She said a ‘geopolitical risk premium’ in world oil prices resurfaced in early November on Iran’s alleged nuclear weapons ambitions.

“Any embargo of Iranian crude would drive prices dramatically higher,” he said. “Offsetting this crude would test the excess capability of the major OPEC Gulf producers.