EUROPEAN COMMODITIES UPDATE: Base metals bolstered whilst crude edges higher, and gold flatlines
Analysis details (10:50)
WTI and Brent futures were bolstered in early European hours amid encouragement seen from China's loosening of COVID restrictions, but the upside remains somewhat capped by the developments among the G7, US-Iran, and in the run-up to the OPEC/OPEC+ meetings on Wednesday and Thursday respectively. In fitting with Bloomberg sources yesterday, G7 leaders agreed to study potential price caps for Russian oil and gas. Desks have been seemingly in unison when it comes to the difficulty of reaching consensus, whilst Russia could counterattack by further reducing supply/limiting exports – which will likely intensify energy price impact on inflation. Moving on, OPEC+ is unlikely to provide much in the way of fireworks, given that the monthly increase was flagged at the start of June – with next month's meeting set to be more interesting. On that note, French President Macron told US President Biden, after a conversation with UAE's Crown Prince, that the UAE is producing oil at near-maximum capacity. The UAE Crown Prince also said Saudi Arabia was able to increase output by 150k BPD or a little more. The UAE Energy Minister also noted that the UAE is producing near max capacity, according to Reuters. The theme of "actual output" will likely gain more focus over the coming weeks as the OPEC+ output reduction pact comes to an end, whilst Russian oil remains shunned by the West. WTI Aug' trades on either side of USD 111/bbl, while Brent Sep' meanders around USD 112.50. Elsewhere, spot gold is uneventful, around USD 1,825/oz in what has been a sideways session for the bullion since the reopening overnight. Base metals, on the other hand, are posting broad gains across the complex - with LME copper back above USD 8,500/t amid optimism as China loosens some COVID-related rules.
28 Jun 2022 - 10:49- MetalsGeopolitical- Source: Newsquawk
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