EUROPEAN COMMODITIES UPDATE: Chevron strike action begins while oil holds onto the week’s upside

Analysis details (10:45)

• Thus far, fundamentals have been limited for the crude complex with the broader macro narrative digesting the latest data/speaker updates ahead of announcements from key Central Banks in the next few weeks, in addition to US-China tensions via Apple’s iPhone. Similarly, newsflow for the gas space has been limited but the updates pertinent as strike action commences and a marked bullish move seen. Finally, metals are diverging slightly as gold benefits from the tone and incremental USD softness while base metals succumb to sentiment.


• WTI and Brent have spent the morning posting downside of circa. USD 0.30/bbl but have since picked up slightly into the green, with the benchmarks on track to retain around half of the week’s pronounced output-driven upside. As it stands, WTI is set to close the week out with upside of over 1.0%; ahead, the next OPEC events are scheduled for October and begin with the JMMC on October 4th, which last time gave its full support to the Saudi and Russia voluntary output measures.


• European gas benchmarks are experiencing a pronounced bid with Dutch TTF Oct’23 posting gains in excess of 10% to levels comfortably above EUR 36 as the Offshore Alliance strikes at Chevron’s Australian facilities got underway. This round of strike action is expected to last for one week, but notice for an additional week of action from September 14th has already been submitted. To recap, talks with Offshore Alliance and Chevron’s negotiators broke down with the sides seemingly far apart on a number of key issues. As a reminder, desks have suggested that a full suspension of production at the Chevron sites could take circa. 4% of global supply offline; however, the impact within Europe is expected to be somewhat cushioned given that storage levels are already above seasonal benchmarks and would still fill before end-2023 under the most adverse output scenario.


• Finally, metals are diverging a touch as spot gold benefits from its traditional haven status as sentiment within the equity space continues to deteriorate following the European cash open. In terms of this turn in sentiment, while it commenced around the cash open and has been relatively gradual in nature it has been exacerbated by the multiple reports with incremental updates on China’s iPhone restrictions. Currently, the yellow metal holds around USD 1925/oz and remains between the 200- & 10-DMAs. Elsewhere, base metals are succumbing to the above risk tone and are also sensitive to China’s NDRC warning that they will continue to closely monitor the market and crack down on illegal activities in relation to iron ore.

08 Sep 2023 - 10:45- Research Sheet- Source: Newsquawk