EUROPEAN COMMODITIES UPDATE: Caged trade across commodities with metals underpinned by a softer Dollar, but crude is subdued

Analysis details (10:18)

• WTI and Brent front-month futures are flat in tight ranges with little in the way of fresh newsflow for the complex, with the downside from the overnight risk aversion somewhat cushioned by the constructive Private Inventory report yesterday, while the energy market’s focus remains on the developments in Australian LNG labour talk. To quickly recap the Private inventory numbers, headline crude printed a draw of 6.2mln barrels, deeper than the expected 2.3mln barrel draw, with traders looking for confirmation from the EIA release later today. Elsewhere, markets continue to assess the risk that could arise should Aussie LNG labour talks break down. In terms of the latest, Woodside Energy workers at the North West Shelf LNG plant will likely hold more talks next week after failing to reach an agreement yesterday. The talks are reportedly slated for next Wednesday, according to Bloomberg sources. Meanwhile, Chevron will reportedly delay plans to sell some spot market cargoes from its Gorgon operation amid the risk of strikes, according to Bloomberg sources. Although European imports of Australian LNG aren’t substantial, the fears over competition with other Asian nations for replacement cargoes have built a premium into Nat Gas prices. Dutch TTF prices are relatively subdued today with the Sept contract around the EUR 38.50/MWh mark at the time of writing vs earlier highs of around EUR 42.50/MWh.


• Over to metals, spot gold moves in tandem with the Buck after finding overnight support at the USD 1,900/oz mark and gradually inching higher back towards its 200 DMA (1,905/oz). The yellow metal yesterday briefly dipped under the psychological level on the firmer-than-expected US Retail Sales data, and analysts at ING posit “with the increase seen in real yields lately, it is difficult to see any meaningful upside to gold prices in the short term”. Base metals meanwhile have tilted firmer since the lacklustre European opened with sentiment in the complex potentially supported (alongside the soft dollar) by Chinese battery maker CATL unveiling its new "superfast charging" long-range battery Shenxing with 400km charged in 10 minutes, whereby the Co. expects to start mass production by end of 2023 and expects EVs to be equipped with the battery by Q1'24, which could prove supporting on the demand side. 3M LME copper found support around USD 8,150/t before reclaiming a USD 8,200/t+ handle throughout the European morning.

16 Aug 2023 - 10:20- Research Sheet- Source: Newsquawk