EUROPEAN COMMODITIES UPDATE: Commodities fade earlier gains as sentiment slips, but gold bucks the broader trend

Analysis details (09:15)

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  Crude futures have given up their earlier modest gains as risk sentiment during early European trade deteriorated despite a lack of any fresh macro drivers. That being said, in the bigger picture, the complex remains within the ranges seen since the start of the year. Friday saw a strong end to the week for crude prices as both WTI and Brent front months settled around USD 1/bbl higher despite the SVB-related volatility in the equity market. Some desks believe the market is focused on the positive demand picture for oil, whilst expectations of a more hawkish Fed have also fallen and thus weigh less on demand. Desks suggest the demand picture has recently been bolstered by reports of strong purchasing from China, with the move also in line with the narrowing in the Brent-Dubai spread. “This makes sense given the demand recovery that is expected not only from China but broader Asia following a relaxation in China’s Covid policy late last year”, ING says. WTI Apr trades below USD 76.50/bbl (USD 76.14-77.47/bbl range), while Brent May sits just under USD 82.50/bbl ( USD 82.25-83.48/bbl range).


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  Gas prices are mixed, with Dutch TTF futures back under EUR 50/MWh following the rally towards the end of last week – which took prices above the psychological level – while US Henry Hub sits firmer intraday but waned back under USD 2.50/MMBtu. “There are several catalysts for the move higher, including ongoing strike action in France which is affecting operations at 4 LNG import terminals. Also in France, EDF discovered some defects in two of its nuclear reactors, which has led to them being halted. And finally, these concerns are coinciding with a cold snap across large parts of Europe. However, for now, EU gas storage is still comfortable at about 56% full, well above the 5-year average of 36% full for this time of year.”, ING posits.


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  Metals are mostly firmer amid the decline in the Dollar, with spot gold holding its head above USD 1,850/oz and north of its 50 DMA (1,871.91/oz) as the yellow metal eyes USD 1,900/oz to the upside, although spot gold waned from its overnight USD 1,894.68/oz high. Industrial metals are cushioned by the Dollar but capped by the broader risk tone. 3M LME copper has fallen off highs after reaching levels close to USD 8,950/t. Over the weekend, MMG announced that transportation of concentrate recommenced on March 11th after the removal of roadblocks and site operations are returning to full capacity at the Las Bambas copper mine in Peru, according to Reuters. Elsewhere, LME aluminium is little impacted by reports on Friday which suggested Canada will ban the import of Russian steel and aluminium products. The ban will include iron and non-alloy steel, semi-finished and finished products, such as tubes and pipes, and will also include all Russian aluminium products.

13 Mar 2023 - 09:15- MetalsEU Research- Source: Newsquawk