EUROPEAN COMMODITIES UPDATE: Broader sentiment and the USD’s resilience weigh on the complex

Analysis details (10:35)

• Crude benchmarks are under pressure in-fitting with the general risk tone as sentiment has been gradually slipping throughout the European morning. While there hasn’t been a single fundamental catalyst behind the move, the complex is weighed on by the USD and as the latest German Ifo release points to the economy heading or a winter recession; despite the headline metrics beating forecasts slightly.


• Action which follows relatively contained APAC trade where the region was more focused on FX action. Currently, WTI and Brent Dec contracts are lower by just over 1% or USD 1/bbl and reside at session lows of USD 83.50/bbl and USD 92/bbl respectively.


• Fresh drivers explicitly for the energy complex have been limited, with the broader macro picture continuing to dictate price action which itself remains focused on Fed guidance, earnings and political developments among other inputs. More broadly, we are awaiting the first of potentially multiple EU Energy Ministers gatherings in the next few weeks to discuss a price cap, with Estonia’s Economy Minister this morning saying a compromise should be more attainable now as storage is full and prices are dropping.


• Moving to metals where, despite the generally downbeat tone, spot gold is tarnished by ongoing USD strength with the DXY remaining resilient around the 112.00 mark after a brief move below. As such, the yellow metal remains below the 10-DMA which itself has slipped to USD 1648/oz; for reference, the 21-DMA resides at USD 1665/oz.


• Elsewhere, aluminium is faring better than the likes of copper at present and perhaps deriving some support from Norsk Hydro announcing it is to commence a partial curtailment of its Norwegian aluminium smelters in order to reduce power consumption.

25 Oct 2022 - 10:35- MetalsEU Research- Source: Newsquawk