EUROPEAN COMMODITIES UPDATE: Commodities oscillate with the Dollar as the clock ticks down to Powell

Analysis details (10:27)

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  WTI and Brent front-month futures trade with no firm direction around USD 80.50/bbl and USD 86/bbl respectively as sentiment in Europe this morning is somewhat tentative ahead of Fed Chair Powell’s appearance later today. Crude news flow has been light this morning, but overnight, the Chinese trade data hinted as softer domestic demand, which desks warn could pressure sentiment in the short-to-medium term if imports fail to recover. “The latest trade data from China shows that crude oil imports in the nation remained weak at the start of the year as refiners eased purchases ahead of the Lunar New Year holiday”, say the analysts at ING. On the supply side, French fuel depots have been blocked as the pensions protest kicks off, according to a union cited by AFP. TotalEnergies' (TTE FP) Gonfreville refinery (240k BPD) is completely blocked, and Exxon's (XOM) Port Jerome (270k BPD) and Fos Sur Mer (140k BPD) refineries are on strike, according to the union. However, TotalEnergies (TTE FP) said there is no shortage of fuel within its gas stations and reserves at a high level. Sticking with supply, Kazakhstan's Tengizchevroil (700k BPD capacity) cut daily output by 11% between March 1-6th due to unscheduled maintenance, according to Reuters sources. Meanwhile, Russia in February started diesel export supplies to Saudi Arabia, according to traders and Refinitiv data.


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  Over to gas markets, US Henry Hub and Dutch TTF futures are flat at USD 2.5690/MMBtu and at EUR 42.50/MWh. Reports via Bloomberg suggested the EU will be making a move as a buyers’ group on the international gas market next month. Elsewhere, Morgan Stanley lowered its TTF nat gas price forecast for 2024 to USD 15/MMBtu (prev. USD 18.10/MMBtu).


• In terms of metals, spot gold trades on either side of the unchanged mark but has been titling lower in recent trade as the Dollar index prints marginal fresh intraday highs. Spot gold, at the time of writing, is testing its 21 DMA (USD 1,842.58.oz) and resides near session lows after declining from a USD 1,851.62/oz peak. Base metals are now mostly lower after the initial mixed picture seen heading into the European cash open, although the losses thus far are minimal and seem to be largely Dollar-driven. All eyes turn to how the Fed Chair influences the Dollar (and by extension commodities) at 15:00GMT/10:00EST, with the potential for a text release at 13:30GMT/08:30EST.

07 Mar 2023 - 10:29- Research Sheet- Source: Newsquawk