EUROPEAN COMMODITIES UPDATE: Commodities overall heavy as sentiment weighs before US inflation

Analysis details (09:56)

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  WTI and Brent futures are softer in early European hours in the run-up to the US CPI, with market sentiment also tilting slightly negative from the modest positivity seen at the European equity cash open. The benchmarks settled higher yesterday in what was ultimately a choppy session, with upside capped at the end of US trade by a surprise build in the weekly Private Inventory (Crude +3.62mln vs. exp. -0.9mln) - with traders eyeing the weekly EIA release for confirmation. Sticking with the EIA, the agency’s Short-term Energy Outlook (STEO) upgraded its 2023 world oil demand forecast by 120k BPD whilst it also downgraded its spot Brent average forecast for 2023 and 2024 to USD 79/bbl (prev. USD 85/bbl) and USD 74/bbl (prev. USD 81/bbl) respectively. Furthermore, in the US, President Biden's admin plans to begin buying oil to refill the SPR after completing maintenance work this year, according to Bloomberg. As a reminder, the US previously guided SPR refilling around the USD 67-72/bbl mark for WTI. Away from the US, Russia said its oil output cuts almost hit its pledged goal in April – which follows the 500k BPD voluntary cut announced prior to the wider OPEC+ voluntary cuts seen earlier this year. Meanwhile, UAE's ADNOC Executive Director, on China, “There are mixed signals but, in particular, with domestic aviation, we’ve seen a strong pickup in activity. For energy demand in that part of the world, I think the recovery is in the right place.” The market in China and Asia more broadly is at “an acceptable level of recovery," Demand in China has rebounded quickly this year with the economy’s reopening, particularly when it comes to jet fuel. There were also reports that Kazakhstan raised oil exports for the BTC pipeline in April. In Europe, UK's Unite union announced 1,200 offshore workers will conduct a 2-day strike in a dispute over jobs, pay and conditions with the strike action to hit various operators including BP, Shell, Repsol and others. WTI June has fallen back under USD 73/bbl (vs high USD 73.64/bbl) while its Brent counterpart hovers around USD 76.50/bbl (vs high USD 77.39/bbl).


• Over to metals, spot gold posts marginal losses as the DXY leans towards the firmer end of a tight pre-CPI range of 101.51-73 at the time of writing. The yellow metal remains within yesterday’s parameters and holds onto gains above USD 2,000/oz in a current USD 2,026.34-2,038.29/oz range. Elsewhere, base metals kicked off the European session flat across the board, but the complex later slipped alongside broader risk sentiment, with 3M LME copper approaching USD 8,500/t from levels nearer to USD 8,600/t. Meanwhile, reports yesterday suggested Peru's copper production rose 20.4% Y/Y in March, according to the energy and mining ministry, whilst Reuters today reported that Chinese buyers are said to be eyeing a resumption of copper trade with Australia as relations between the two nations improves ahead of an expected visit by Australia's Trade Minister Farrell to Beijing, China.

10 May 2023 - 09:58- MetalsData- Source: Newsquawk