EUROPEAN COMMODITIES UPDATE: Commodities buoyed by the Dollar’s dip, OPEC+ looms

Analysis details (10:40)

• Crude benchmarks are modestly bid this morning, taking the lead from broader sentiment and associated FX action. Unsurprisingly, much of the broader focus is on tomorrow’s OPEC meeting which gets underway just after midday and is expected to see the announcement of an output cut and possibly voluntary reductions from the likes of Saudi on top of this, with haggling around the magnitude likely to take centre stage – full newsquawk preview available.


• Interestingly, in the context of these potential cuts, we have seen remarks from the Saudi Aramco CEO this morning noting that spare capacity is extremely low for oil. More broadly, the CEO expects oil demand to pick up.


• OPEC aside, the other key commodity specific focus point is the potential energy price caps. In an update this morning, German Finance Minister Lindner says they are open to joint steps on the international gas market, prepared to discuss measures to contain gas prices. Remarks which occur in the context of Germany announcing independent measures to combat the price crisis domestically, incl. EUR 200bln of spending, measures which have drawn opposition from some within the EU particularly as Germany has previously been in opposition to an EU-wide gas price cap. On a potential cap, the Shell CEO says they struggle to see how a Russian oil price cap would operate.


• In terms of where we currently stand, the crude benchmarks are firmer by just shy of USD 1/bbl and towards the top-end of the sessions parameters and more broadly are well within the ranges of the last few days/weeks.


• Crude aside, both precious and base metals have benefited from the pullback in the USD. Lifting spot gold back above USD 1700/oz to a session best USD 10/oz above the figure and bringing the 50-DMA into focus at USD 1723/oz. Similarly, LME copper has climbed further above opening levels around the USD 7.5k mark, positing upside in excess of USD 50 at the time of writing; reminder, the broader market has seen a reduction in activity owing to the absence of Chinese participants for Golden Week.

04 Oct 2022 - 10:40- MetalsEU Research- Source: Newsquawk