EUROPEAN COMMODITIES UPDATE: Commodities feel some reprieve as the Dollar eases, but gains remain capped pre-CPI

Analysis details (10:15)

• WTI and Brent futures are on a firmer footing after settling marginally firmer on Monday in what was a session of quiet newsflow to start the week with a lack of drivers ahead of this week’s plethora of risk events but following deflationary metrics from China over the weekend. Crude edged up in APAC hours in a continuation of Monday's intraday rebound and amid overnight reports that a Norwegian-flagged tanker was hit by a missile that was suspected to be fired by Yemen's Houthi rebels; since confirmed. Aside from geopolitics, reports yesterday also suggested OPEC+ oil output cuts of 2.2mln BPD in Q1 may not be long enough as crude oil physical and futures show increasing signs of a surplus ahead of their implementation, according to analysts and traders.


• In the European morning, the Dollar remained softer while complex-specific newsflow was light but geopolitical headlines were abundant. Following the recent attacks in the Red Sea, a source in the Yemeni government said they received a US invitation to participate in a military coalition to protect the Red Sea. "We will participate in the military coalition with a formation of naval forces to confront Houthi operations", according to Al Jazeera. Elsewhere, Israeli PM Netanyahu said "We are preparing for a possible confrontation with the Palestinian Authority (PA) security services in the West Bank", according to Sky News Arabia, as eyes remain on the potential expansion of the Israeli-Hamas war, particularly following yesterday’s punchy Israeli rhetoric against Lebanon’s Hezbollah. Over in Ukraine, NYT reported that the US and Ukraine are reportedly searching for a new strategy that they can begin to execute early next year following Kyiv's failed counteroffensive, and as Russia reportedly increased its firepower advantage with a fleet of drones largely supplied by Iran, according to US officials. This follows overnight reports that the Russian Defence Ministry said a Ukrainian-launched tactical ballistic missile was shot down over the Belgorod region in Russia, according to Reuters. Traders now look ahead to the US CPI metric for impetus.


• WTI Jan is off best levels in a USD 71.27-71.96/bbl parameter while Brent Feb sits between a USD 75.94-76.66/bbl parameter.


• Metals are broadly benefitting from the Dollar pullback with spot gold using the opportunity to take a breather following the post-NFP tumble under its 21 DMA (USD 2,006.10/oz today) with spot silver also feeling some reprieve after six straight sessions of losses. Spot silver takes aim at several levels to the upside including the 50 DMA (USD 23.13/oz), 100 DMA (USD 23.22/oz) and 200 DMA (USD 23.50/oz). Base metals see modest gains amid the broader risk appetite, but remain capped ahead of US CPI. 3M LME copper trades towards the middle of a USD 8,350-94/t range. Overnight, Singapore iron ore futures hit a 9-month high with traders citing the revival of Chinese stimulus hopes.

12 Dec 2023 - 10:15- MetalsEU Research- Source: Newsquawk