EUROPEAN COMMODITIES UPDATE: Choppy trade in crude while precious metals tilt higher and base metals trade mixed

Crude Oil: WTI Feb -0.3%/Brent Mar -0.3%

• Choppy trade overall with participants awaiting US CPI for a larger impulse, although geopolitical risks remain as Russia and Ukraine target each others' energy infrastructure whilst an Israel-Hamas ceasefire deal is seemingly imminent, although sticking points remain.


• Some weakness in the complex was seen after the EIA OMR, which trimmed its 2025 world oil demand growth forecast to 1.05mln BPD (prev. 1.1mln BPD), but said the new US sanctions on Russia could significantly disrupt Russian oil supply and distribution chains.


• Russia's Kremlin meanwhile said "nothing can be ruled out" when it comes to Russia's response to the latest US sanctions on the energy sector.


• EIA STEO yesterday stated that 2025 US crude production is seen at 13.55mln BPD (prev. 13.52mln bbls) and 2026 US crude production is seen at 13.62mln BPD, while both 2025 and 2026 US oil demand is seen at 20.5mln bpd. Note: the OPEC MOMR will also be released today (time TBC)


• Also on Tuesday, the latest private sector inventory data was mixed as there was a wider-than-expected drawdown in headline crude inventories but gasoline and distillate stockpiles showed substantial builds - traders await confirmation from the DoEs.


• WTI Feb resides in a USD 77.25-78.35/bbl range while Brent Mar sits in a 79.62-80.64/bbl parameter at the time of writing.

Nat Gas: Dutch TTF Feb +1.6%

• European gas prices are propped up by reports that the EU is considering a gradual ban on Russian LNG and aluminium, according to Bloomberg.


• Analysts at ING posit that the news "will likely only add to supply uncertainty for the European market, potentially offering some support to prices. In 2024, around 18% of EU LNG imports came from Russia."

Precious Metals: Gold +0.4%, Silver +0.7%, Palladium +1.0%

• Modest gains across the board with prices supported by a softer Dollar and a lack of macro newsflow at the time of writing.


• Traders are on the lookout for the US CPI at 13:30 GMT where the annual rate of headline inflation is seen rising, though the core measure is expected to be unchanged (preview available on the Newsquawk website).


• As a reminder, the Fed’s December meeting minutes showed a cautious approach, with inflation progress expected to take longer due to potential policy changes. Money markets have lowered expectations for rate cuts, with just one 25bps cut fully priced in 2025.


• Spot gold currently resides in a USD 2,669.36-2,688.56/oz range after topping yesterday's high (USD 2,678.39/oz) and now eyeing the peak from Monday (USD 2,693.55/oz).

Base Metals: 3M LME Copper -0.3%

• Mixed trade across base metals with copper prices indecisive since APAC trade amid the mixed and choppy sentiment seen across global markets.


• Dalian iron ore futures ended daytime trade +0.7% with participants citing better-than-expected Chinese credit data, although upside is capped by looming tariffs threats from the incoming US administration.


• Aluminium prices rose towards USD 2,600/t, driven by the EU’s consideration of import restrictions on Russian metal and expected slower production growth in China. The EU is planning sanctions on Russian commodities as part of its response to the Ukraine invasion.


• Elsewhere, China’s aluminium industry is facing production constraints as the government’s 45mln tonne capacity cap, set in 2017, limits output; with the cap reached, production in 2024 is expected to hit a record, potentially reducing exports by up to 9% in 2025.


• Analysts at ING, on US tariffs, "believe the timing as well as the scope of the US tariffs will be key for demand for copper and other industrial metals this year. A continued trade war remains the key downside risk to our industrial metals outlook. However, the prospect of a prolonged trade war has raised expectations for Beijing to unveil more aggressive stimulus measures. We believe Trump’s tariffs could trigger bigger stimulus from China, limiting the downside to copper prices. Copper is up more than 4% so far this year.

15 Jan 2025 - 10:15- MetalsGeopolitical- Source: Newsquawk