EUROPEAN COMMODITIES UPDATE: Choppy trade in crude while metals succumb to the Dollar

Analysis details (10:45)

• WTI and Brent front-month futures diverge intraday on account of the US MLK holiday on Monday which resulted in no WTI settlement. Nonetheless, WTI Feb holds onto a USD 79/bbl status whilst Brent trades on either side of USD 85/bbl in what has been a choppy session. US players are reentering the market today whilst Chinese participants will be away from Jan 21st-29th due to the Chinese New Year. Sentiment and Dollar action have largely been driving the recent moves in oil, whilst fundamentals are underpinned by China’s reopening. Newsflow for the complex has been light this morning, but the OPEC Secretary General spoke on the Davos WEF sidelines and said he is “very bullish” on China, and cautiously optimistic about the global economy. The SecGen suggested Chinese demand will grow by 500k BPD this year, but OPEC+ is waiting to see what happens after China's New Year holiday. Elsewhere, in geopolitics, Radio Free Europe's Jozwiak wrote that a "Review [is] underway on the Russian oil price cap. Currently at USD 60 but I understand there is a good chance that it might be lowered a bit in upcoming weeks". Meanwhile, in Russia, the Russian Defence Ministry discussed increasing the number of military personnel to 1.5mln (vs ~1.3mln in 2022), according to Tass, and added that major changes in the Russian army will take place from 2023-26. Over to NatGas, Dutch TTF front month has continued to fall whilst US NatGas is firmer intraday, with traders on the former pointing to ample supply in the form of gas storage, whilst the latter is propped up by state-side weather and accompanying increase in demand.


• In terms of metals, spot gold has been drifting lower as the Dollar remains firm, with the yellow metal trundling lower from highs of USD 1,919/oz down to around USD 1,905/oz. Base metals are softer across the board (but to varying degrees) despite the supportive Chinese data overnight as a firmer Dollar exerts pressure on the complex. Nonetheless, LME copper remains somewhat cushioned and trades on either side of USD 9,100/oz.

17 Jan 2023 - 10:45- Research Sheet- Source: Newsquawk