EUROPEAN COMMODITIES UPDATE: Commodities bolstered by Chinese COVID rumours

Analysis details (09:50)

WTI Dec and Brent Jan futures are firmer intraday but off best levels with the former around USD 87.00/bbl (85.92-88.24 range) and the latter around USD 93.50/bbl (92.33-94.74). The complex saw steady gains during APAC hours following optimism that China could reconsider its Zero-COVID policy, although the Chinese Foreign Ministry later said that they are not aware of the situation, whilst China’s Zhengzhou said that the city will lift the temporary control for COVID-19 low-risk regions and gradually resume normal life, according to Global Times. Crude prices were also lifted by the softer Dollar and broader risk appetite overnight. The morning also saw commentary from Russian Deputy PM Novak who suggested Russia and Iran discussed an oil swap and gas supply, according to TASS. Add to that, the Iranian Oil Minister said "our relations with Russia are closer than ever, and the level of cooperation will increase day by day", according to Al Jazeera. Meanwhile, energy-giant bp “expects oil prices to remain elevated in the fourth quarter due to the recent OPEC+ supply cut reducing supply amid ongoing uncertainty associated with Russian oil exports” and “expects global gas prices to remain elevated and volatile during the fourth quarter due to a lack of supply to Europe with the outlook heavily dependent on Russian pipeline flows or other supply disruptions”, according to earnings commentary. As a reminder, the second day of the ADIPEC conference is ongoing so participants may be on the lookout for headline risks on that front in the absence of other drivers. Over to gas, Dutch TTF Dec declined some 5% amid a demand outlook rejig as Europe is set for mild weather in November, according to Bloomberg citing forecasters. Elsewhere, spot gold is firmer amid the softer Dollar but met resistance at USD 1,650/oz after topping its 10 DMA at USD 1,646.20/oz. LME metals are firmer across the board with 2M copper back above USD 7,500/t and briefly surpassed USD 7,600/t before trimming earlier gains, with price action driven by the aforementioned China news alongside the softer Dollar and firmer risk tone.

01 Nov 2022 - 09:50- Research Sheet- Source: Newsquawk