EUROPEAN COMMODITIES UPDATE: Commodities are under broad pressure as DXY firms in the run-up to tomorrow’s US CPI

Analysis details (09:44)

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  WTI March and Brent April futures are softer and towards the bottom of intraday ranges as the complex takes a breather from last week’s gains. To recap, Friday saw both benchmarks settle just under USD 2/bbl apiece, with prices buoyed by Russia’s unilateral move to cut oil production by 500k BPD in response to the Western price caps. “These cuts do not change our view on the market, given that we were already assuming that Russia would have to reduce supply as a result of the EU ban on oil and refined products. The weakness that we are seeing in prices in early morning trading today likely reflects the market coming to the realisation that these cuts are already largely priced in”, say the analysts at ING. The day is quiet from a crude-specific point, but this week will see the releases of the OPEC and IEA monthly oil market reports on Tuesday and Wednesday respectively, whilst traders look ahead to the Olso Energy Conference (14-16th Feb) and the IEA-IEF-OPEC Symposium (15th Feb). Meanwhile, from a demand perspective, the European Commission upped its 2023 GDP growth forecast and said the Euro Zone is to avoid the previously expected technical recession.


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  Nat Gas prices diverge this morning with US Henry Hub futures firmer and Dutch TTF on a softer footing – but both contained to recent ranges. Regarding US prices, desks point to reports that Freeport LNG exported its first cargo since June 2022 this weekend, whilst the Freeport plant is expected to resume production. Analysts believe domestic US nat gas prices should be supported by the increased demand for feed gas.


• In terms of metals, spot gold feels some pressure from a stronger Dollar in the run-up to tomorrow’s US CPI data, with the yellow metal approaching USD 1,850/oz from a USD 1,866.64/oz intraday best, whilst Friday’s low sits at USD 1,852.84/oz. Base metals are mostly softer amid the first Dollar and the broader cautious risk tone – with 3M LME copper holding under USD 9,000/t in early trade. Ahead, the week sees the Singapore Steel & Raw Materials conference on the 15th  Feb, which will discuss recent developments in the region, and trends in the Asian ferrous scrap market, alongside forecasts on the iron and steel markets.

13 Feb 2023 - 09:45- Research Sheet- Source: Newsquawk