EUROPEAN COMMODITIES UPDATE: China’s reopen underpins commodities but a firmer Dollar caps gains

Analysis details (09:45)

WTI Jan and Brent Feb contracts are choppy but ultimately firmer intraday around USD 81.50/bbl and USD 87/bbl respectively in the aftermath of OPEC+ maintaining its output targets (as expected), and following reports that several Chinese cities accelerated the loosening of COVID-19 restrictions over the weekend including Shanghai and Shenzhen. Furthermore, the EU agreed on a Russian oil price cap of USD 60/bbl, which is below the initial proposal of USD 65-70/bbl, although still above what Russia will be receiving for Urals crude. The Russian oil price cap and embargo of Russian crude will come into effect today. In terms of the OPEC+ confab on Sunday, the meeting was smooth, current targets have been rolled over, whilst the JMMC is next set to meet on February 1st, and with the next OPEC+ meeting in June – although given the market fluidity, an unscheduled meeting between now and June would not be surprising. “Despite no change in OPEC+ policy and the high level of the price cap, oil prices have been well supported so far in trading today. A further relaxation in China’s Covid restrictions has proven supportive for the market.”, says ING. Elsewhere, spot gold pared back earlier gains as the Dollar picked up, with the yellow metal back under the USD 1,800/oz mark around its 200 DMA at USD 1,795/oz. Base metals have also trimmed earlier China-induced gains, with LME copper back under USD 8,500/t after reaching a USD 8,517/t peak intraday.

05 Dec 2022 - 09:45- Research Sheet- Source: Newsquawk