EUROPEAN COMMODITIES UPDATE: Commodities hold onto post-NFP losses as the Dollar stands firm

Analysis details (09:41)

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  WTI March and Brent April futures are consolidating following the hefty post-NFP losses on Friday which saw the benchmarks both settle lower by over USD 2/bbl, with the former on either side of USD 73.50/bbl and the latter oscillating around USD 80/bbl. Over the weekend, the EU implemented its ban on Russian oil products which will have the greatest impact on Russian diesel and naphtha. Meanwhile, the G7 price cap on Russian refined products also came into effect over the weekend, which permits G7 shipping and insurance firms to trade Russian refined products at or below the price cap. In terms of weekend commentary, IEA chief Birol said the price cap on Russian oil achieved the objectives of stabilising the oil markets and cutting Russia’s oil revenues with its oil and gas export revenues in January down by almost 30% or around USD 8bln in January from a year ago. Birol also commented that the largest uncertainty this year is China and expects half of global oil demand growth will be from China this year, while he also stated that China’s jet fuel demand is exploding this year which puts upward pressure on global demand and noted that the products markets will stabilise in H2 as more refineries come online. Meanwhile, Saudi’s Energy Minister said he hopes that sanctions, embargoes and a lack of investment don’t lead to a shortage of energy supplies. Elsewhere, Turkey has halted oil deliveries to the Ceyhan terminal as a precautionary measure following the magnitude 7.7 earthquake in the region. Analysts also warn that this week’s CFTC Commitment of Traders report may not be published following a cyber incident – “The incident has meant that some clearing members have been unable to provide accurate and timely data to the CFTC”, according to ING.


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  Nat Gas futures are softer intraday on both sides of the pond, with desks suggesting that storage inventories are tracking well above normal for this time of the year amid milder-than-expected weather. Elsewhere, there were reports the natural gas pipelines in Hatay, Turkey, burst under the force of the 7.7 magnitude earthquake over the weekend.


• Over to metals, spot gold attempts to nurse some of its recent losses after Friday’s NFP-induced slide to a USD 1,861.79/oz low from a USD 1,918.57/oz high (50 DMA at USD 1,848.66/oz), with traders on guard for a myriad of central bank speakers slated for the week. Base metals are mostly lower amid the cautious risk tone, with 3M LME copper extending losses under USD 9,000/t to a current USD 8,878/t low.

06 Feb 2023 - 09:40- MetalsGeopolitical- Source: Newsquawk