EUROPEAN COMMODITIES UPDATE: Choppy but contained trade in crude, Gold moves sideways, and base metals are mixed on a quiet Friday morning

Analysis details (10:22)

• WTI and Brent front-month are choppy within tight ranges and moving between mild gains and mild losses. The crude complex is awaiting the next catalyst which in recent days has been the broader risk sentiment. Crude prices this week have also shrugged up the larger-than-expected draws in Private Inventories, which were echoed in the official EIA data. Analysts at Rabobank remind us that Brent crude held a continuous rally from USD 74/bbl to USD 85/bbl over July, which briefly extended into August. The bank holds the view that Brent will not breach USD 88/bbl just yet amid the heavy resistance around the last week – “we see the current macro overhang and worsening Chinese economic data to keep this ceiling intact”, Rabobank says, as they reiterate their call for Brent to trade between USD 72-88/bbl until Q4, “where prices are likely to rise and average USD 90//bbl.” WTI Sep and Brent Oct futures trade on either side of USD 80.50/bbl and USD 84.25/bbl respectively.


• Over to gas markets, eyes remain on the situation in Australia. In terms of the latest, the Australian union said protected industrial action ballots opened at Chevron's Wheatstone downstream and Gorgon facilities in Australia and the protected industrial action ballot will open on Monday at the Wheatstone platform. Based on industrial rules, the ballot for workers a Chevron's Gorgon and the Wheatstone downstream facility must close by August 24th. A separate ballot for the Wheatstone offshore platform workers must close by August 28th. In Europe, Italian Energy Minister said Italy's gas storage facility is 90% and they look forward to the winter with more confidence than 2022, according Il Messaggero. Dutch TTF front month futures are currently around 1% intraday at the EUR 36.50/MWh mark vs a high of around EUR 38.40/MWh.


• Finally, precious metals are trading flat/subdued as the Dollar inches higher in European trade despite a lack of catalysts this morning, with spot gold around the USD 1,890/oz mark after printing a range of USD 1,885.9-1,903.43/oz yesterday, with participants eyeing next week’s PMI data and the Fed’s Jackson Hole Symposium. UBS cut its end-year target for gold to USD 1,950/oz (prev. USD 2,100/oz)  Now sees a softer landing for the US economy and does not expect the Fed to cut rates until 2024 (prev. end-2023). Elsewhere, base metals are mixed but contained to tight ranges, with 3M LME copper finding resistance at USD 8,300/t before pulling back to the low-USD 8,200/t marks.

18 Aug 2023 - 10:25- MetalsEU Research- Source: Newsquawk