EUROPEAN COMMODITIES UPDATE: Choppy trade across commodities but spot gold remains caged just above USD 1,800/oz

Analysis details (10:06)

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  WTI and Brent April futures have nursed losses seen in late-APAC/early European hours in what has been a choppy session since the reopening, with the former between a USD 75.28-76.75/bbl and the latter in a USD 82.38-83.56/bbl parameter. Price action is indecisive after ultimately settling with gains just shy of USD 1/bbl apiece on Friday. The tense geopolitical landscape remains at the forefront for energy. In Russia-related news, PKN Orlen's CEO said Russia has halted supplies of oil to Poland via the Druzhba pipeline, although PKN Orlen suggested the end user will not be impacted as Russian crude makes up only 10% of total supplies. Russia's Transneft said the payment orders for oil shipments to Poland were not issues in the second half of February, with no oil flows to Poland currently, according to Tass. Elsewhere, China's military said it closely monitored the US P-8A military plane when it flew through the Taiwan Strait on February 27th, and added the action by the US deliberately interferes with and disrupts the regional situation and endangers the peace and stability of the Taiwanese Strait. In terms of bank forecasts, Goldman Sachs sees oil prices (Brent) to gradually rise to USD 100/bbl by December and sees oil around those levels in 2024, assuming OPEC increases output by 1mln BPD in H2 2023. If OPEC stays put with current policy, Brent will likely reach USD 107/bbl in December and keep grinding higher thereafter, according to GS. BofA sees USD 88/bbl in Brent this year amid low shale growth, OPEC+ discipline and China's reopening counteracting resilient output from Russia. Meanwhile, ING, citing the latest market positioning data, suggest “Speculative net longs in ICE Brent are still comfortably higher when compared to the range over the past year and reflect the possibility of further liquidation if economic expectations deteriorate. Money managers reduced the net long position in NYMEX WTI by 3,986 lots over the last week to 184,488 lots.”


• Over to gas markets, US Henry Hub and Dutch TTF futures diverge, with the former buoyed by the weather stateside in which parts of the West Coast are experiencing a cold snap, with Los Angeles seeing its first blizzard warning since 1989. Dutch TTF futures remain contained to recent ranges on either side of EUR 50/MWh.


• The metals market is mixed with spot gold caged to a tight USD 1,806-14/oz range as the yellow metal mirrors price action seen in the post-PCE Dollar. From a technical standpoint, spot gold eyes the USD 1,800/oz to the downside ahead of its 100 DMA at USD 1,793.55/oz, whilst upside levels include Friday’s 1,847.57/oz peak. Base metals are now mostly firmer intraday following APAC weakness, but the complex hovers around Friday’s lows, with 3M LME copper back around USD 8,775/t at the time of writing. Overnight, Dalian and Singapore iron ore futures extended losses amid concerns over near-term weaker demand. On Friday, the US announced it is to impose a 200% import tariff on Russian aluminium from 10th March (as touted by sources), although desks do not believe the move will significantly tighten the aluminium market in the US given the small percentage the US imports from Russia.

27 Feb 2023 - 10:09- Research Sheet- Source: Newsquawk