EUROPEAN COMMODITIES UPDATE: Commodities feel broader pressure from a firmer dollar and ongoing US debt woes

Analysis details (09:32)

• 
  WTI and Brent July futures are softer intraday but off worst levels following a session of losses overnight. There wasn’t one particular reason for the weakness seen overnight as the Dollar was steady and newsflow for crude was light, but analysts have been owing part of the losses to US default woes as US Treasury Secretary Yellen said the June deadline still holds and is a hard deadline for the debt limit. Furthermore, desks have been flagging that net speculative longs in ICE Brent continue to fall, with the latest reporting week suggesting net longs cut by 6k lots to the smallest amount held by speculators this year – driven by long liquidations while gross shorts remain sizable. WTI resides around USD 71.50/bbl having dipped to an intraday low of USD 70.67/bbl, while Brent is back above USD 75/bbl after falling to USD 74.55/bbl in early European hours. In terms of commentary, energy trader Vitol’s executive stated that we are moving into the second half of the year where, largely due to Asian demand growth, the world will need more oil barrels than now, adding that "The world will need around 2mln bpd more". This comes ahead of the OPEC+ June confab slated for next week, but before that, the Saudi Energy Minister is poised to make some comments tomorrow at the Qatar Economic Forum.


• Spot gold is relatively flat with a downward bias as the yellow metal trades in tandem with the Dollar and holds around USD 1,975/oz after last week’s drop to levels close to USD 1,950/oz. The downside for the yellow metal remains cushioned by its haven properties against the backdrop of US debt talks. Base metals are largely softer with 3M LME copper just off session lows at the time of writing around the USD 8,150/t mark. Some cite the ongoing US debt talks as a factor, whilst the rising US-Sino tensions could also play a part. Furthermore, iron ore prices have been falling once again with SGX iron ore prices falling back towards USD 100/t.

22 May 2023 - 09:34- MetalsEconomic Commentary- Source: Newsquawk