EUROPEAN COMMODITIES UPDATE: Choppy trade amid COVID developments and Dollar downside, gas cap in focus

Analysis details (10:45)

• A choppy but ultimately fairly contained start to the week for the crude benchmarks. Price action throughout the European morning has been two-way in nature and at times without an overt catalyst or driver. Though, the benchmarks have derived some impetus from the overall risk tone and USD action thus far. Currently, WTI & Brent Fed’23 are firmer by around USD 1.00/bbl on the session but are shy of their overnight peaks by around another USD 1.00/bbl, and as such are someway from last week’s respective USD 77.77/bbl and USD 75.26/bbl best levels.


• Newsflow explicitly for crude has been limited, though we have seen fresh China COVID developments; despite two mainland COVID-related deaths, a further unwinding of restrictions has taken place in Beijing, Macau and most recently Chongqing.


• Elsewhere, attention remains on the EU’s gas price cap with officials portraying an upbeat assessment that points to a deal being achieved today. Following weekend reporting that the EU’s Czech rotating presidency has proposed a EUR 188/MWh cap on Dutch TTF (vs EUR 275/MWh original suggestion), a figure that will likely garner support from the likes of Belgium, Greece and Poland who have been pushing for a sub-200 trigger point. However, it remains to be seen how Germany and in particular the Netherlands will react to this, given their long-standing view that it could disrupt the energy market; a stance that has been bolstered by ICE last week remarking that in response to a cap all options incl. the relocation of the gas hub from the Netherlands would be considered. Amidst this, TTF Jan’23 is lower by over 6% though is yet to test EUR 100/MWh to the downside.


• Moving to metals, spot gold and silver are benefitting from the dented dollar while base metals derive support from the generally positive risk tone and the aforementioned unwinding of restrictions in China, with LME Copper firmer by over 1.0%.

19 Dec 2022 - 10:45- MetalsResearch Sheet- Source: Newsquawk