EUROPEAN COMMODITIES UPDATE: Commodities mostly see cautious gains as the clock ticks down to US CPI

Analysis details (10:05)

• WTI and Brent front-month futures tilt firmer intraday and hold onto most of the prior day’s gains after the contracts settled higher by USD 1.43/bbl and USD 1.77/bbl respectively yesterday after gradually edging higher throughout the Monday session as some participants cited short-covering. Overnight, trade for the complex was choppy within tight ranges but printed fresh lows in early European hours following reports that the Iraqi oil Minister is optimistic about reaching a deal with KRG in the coming days to resume oil exports, although quickly rebounded off worst levels following Bloomberg source reports that China is said to be mulling CNY 1tln of new market funding to boost the housing market, with the PBoC reportedly to inject funds in phases through policy banks, and the first step may be taken as soon as this month, although this was not enough to push prices to session highs. 


• Furthermore, the IEA oil market report was released this morning in which the agency raised its 2023 global oil demand growth forecast by 100k BPD and also upped its 2024 forecast by 50k BPD, although noted the oil market is less tight than expected as supply climbs. The IEA added that with oil demand growth set to slow, the market could shift into a surplus at the start of 2024, and the Russia-Saudi oil cuts are to keep the market in significant deficit through year-end.


• As a reminder, OPEC’s report yesterday modestly upgraded its 2023 forecast by 100k BPD while maintaining its 2024 forecast, and the EIA’s monthly report last week downgraded its 2023 metric by 300k BPD but upped its 2024 forecast by 80k BPD. Ahead, participants are on the lookout for the US CPI release – “any surprises to the upside would likely put some pressure on risk assets, including commodities. A higher inflation print would reinforce the higher-for-longer narrative when it comes to interest rates”, says ING. WTI trades within a USD 78.07-78.71/bbl range while Brent sits in a USD 82.27-82.96/bbl parameter.


• Elsewhere, spot gold remains softer under USD 1,950/oz and within yesterday’s USD 1,931.55-49.14/oz in the run-up to the US inflation figures. Spot silver is firmer just under USD 22.50/oz after yesterday’s move lower was reversed during US hours. Base metals are underpinned by the aforementioned Chinese source's headline to boost the housing market, in turn underpinning demand for industrial commodities. Elsewhere, the EU is said to be mulling the possibility of temporarily extending the truce with the US with regards to steel and aluminium trade to avoid the return of tariffs on as much as USD 10bln of exports, according to Bloomberg sources.

14 Nov 2023 - 10:05- Research Sheet- Source: Newsquawk