EUROPEAN COMMODITIES UPDATE: Base metals continue to be subdued by Trump tariff threats

Crude Oil: WTI Mar +0.2%, Brent Jan +0.2%

• Crude futures trade with a modest upward tilt in the absence of major newsflow during the European morning and after settling marginally lower yesterday following a choppy session.


• Desks suggest that markets are shifting focus from US sanctions against Russia to US President Trump's tariff policies and the growing risk of trade wars.


• On that front, China's MOFCOM, on US President Trump's tariff threats, said tariffs are not good for China, the US, and the world, and added that China is willing to work with the US to promote stable, healthy development of economic and trade ties.


• Elsewhere, yesterday saw the delayed release of the Private Inventory Report, which was bearish with a surprise build in headline crude stockpiles - traders look for today's DoEs for confirmation.


• Private inventory data (bbls): Crude +1.0mln (exp. -1.2mln), Distillate +1.9mln (exp. -0.0mln), Gasoline +3.2mln (exp. +2.3mln), Cushing +0.5mln.


• WTI Mar resides in a USD 75.02-75.71/bbl range and its Brent counterpart in a USD 78.60-79.31/bbl parameter.

Nat Gas: Dutch TTF +3.0%, US Nat Gas +3.0%

• Dutch TTF prices extend on gains after settling higher by over 4.5% yesterday and north of EUR 50/MWh, with upside triggered by an outage at the Freeport LNG export terminal in the US, caused by power issues related to freezing weather. The plant, with a capacity of over 20bcm, will remain shut until power stabilises.


• Elsewhere, desks suggest Europe is seeking more LNG due to the loss of Russian pipeline flows through Ukraine and higher regional demand, whilst storage levels have fallen to 59%, with the European Commission targeting at least 50% by 1 February.


• Add to that, Indonesia reportedly seeks to delay some LNG exports to meet domestic demand needs, according to Bloomberg.


• Desks also suggest that the current pricing curve disincentivises storage for the next winter, as summer 2025 prices are higher than 2025/26 winter prices. This morning, European gas summer-winter spread further widened to EUR 5.4/MWh.


• EU reportedly plans to extend gas storage refill targets (main target of 90% full storage by Nov) ahead of winter for another year (set to expire Dec 2025), according to EU diplomats cited by Reuters

Precious Metals: Gold -0.5%, Silver -1.2%, Palladium +0.3%

• Mostly softer as the dollar remains resilient but with broader newsflow light in the European morning thus far.


• US President Trump is scheduled for 16:00 GMT at Davos, the appearance is listed for 45 minutes, in what is dubbed as a "special address" - with the content of the speech currently unknown.


• Spot gold traded rangebound overnight and took a breather after recently advancing to its highest level in almost three months.


• Spot gold resides in a USD 2,740.86-2,756.59/oz range vs yesterday's USD 2.741.96-2.763.43/oz parameter.

Base Metals: 3M LME Copper -0.6%

• Lower across the board amid the tentative risk mood and with Trump's Chinese tariffs threats remaining a grey cloud over demand in the complex.


• Analysts at ING say "Tariffs are the biggest risk to our industrial metals outlook. We believe with President Trump back in the White House, the downside risks have increased for industrial metals."


• Overnight, sentiment across base metals failed to be lifted meaningfully despite officials from the CSRC, financial regulator and PBoC announcing efforts to boost stocks with China to direct medium and long-term funds towards market investment, while there will be at least hundreds of billions of yuan of new long-term capital for A-shares every year from state-owned insurance companies.


• 3M LME copper resides in a USD 9,147.50-9,234.00/t range at the time of writing.


• Dalian iron ore ended daytime trade +0.1% with traders weighing the announced support with tariffs concerns.

23 Jan 2025 - 10:20- MetalsEU Research- Source: Newsquawk