EUROPEAN COMMODITIES UPDATE: Commodities diverge while crude experiences two-way action

Analysis details (10:45)

• Commodities have experienced some modest divergence with crude benchmarks initially firmer but slipping in the wake of another batch of soft PMIs from the EZ, while metals are near the unchanged mark and have proved relatively unreactive to macro developments thus far.


• Initial upside for the crude space can perhaps best be described as consolidation from Monday’s pressure. Thereafter, the complex came under pressure on the mentioned PMIs which continue to point to recessionary concerns within the EZ where particular emphasis remains on Germany. Developments which pushed the benchmarks below USD 86.00/bbl and USD 90.00/bbl for WTI and Brent Dec’23 respectively. Price action which was exacerbated by PMI-induced EUR pressure and associated USD strength as a result, pushing the contracts to eventual session lows of USD 85.09/bbl and USD 89.46/bbl.


• Thereafter, the complex has lifted off its lows and is back modestly into positive territory amid continued geopolitical tensions and potentially some impetus from reports that China’s Xi is to visit the PBoC, in a move seen as a “sign of focus on the economy”, according to Bloomberg. Additionally, and back to geopolitics, Axios reports that Israel is willing to delay its ground invasion of Gaza by a few days in order to allow for talks on releasing a large number of hostages that Hamas is holding. However, this headline is tempered somewhat by Israeli officials making clear that even if a hostage deal is attained they will not drop plans for a ground assault into Gaza – a clarification which is potentially providing some support too crude.


• Moving to metals, spot gold has dipped marginally into the red amid the EUR-driven bout of USD strength. Though, the yellow metal remains comfortably above technical figures with the 10-DMA closest at USD 1935/oz compared to the current USD 1965/oz session trough which itself is just USD 1 above Monday’s base. Elsewhere, base metals are in the green after marked losses in yesterday’s session and perhaps deriving support from the Chinese-driven APAC session, the mentioned PBoC/Xi visit and numerous well-received European earnings in the space.

24 Oct 2023 - 10:38- Research Sheet- Source: Newsquawk