EUROPEAN COMMODITIES UPDATE: Commodities plumb the depths as Dollar strength and risk aversion persist

Analysis details (09:50)

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  WTI and Brent futures continue to side with both benchmarks posting intraday losses of almost USD 1.50/bbl apiece respectively at the time of writing. The complex continues to be pressured by hawkish central bank rhetoric stoking fears of higher interest rates for longer, with ECB’s Schnabel earlier suggesting the EZ disinflation process hasn’t even begun, whilst Fed’s Bullard did not rule out a 50bps hike at the next Fed meeting. WTI Mar briefly dipped under USD 77.00/bbl from a USD 78.25/bbl high, while Brent Apr declined to levels under USD 83.50/bbl from a USD 84.87/bbl overnight peak. In terms of bank commentary, JPMorgan maintained its oil price forecast of USD 90/bbl and added that barring any major geopolitical events, it would be difficult to reach USD 100/bbl. The desk no longer believes OPEC+ will defend the USD 80/bbl price floor and suggested the new prices floor seemingly shifted to USD 65-70/bbl. JPM does not believe OPEC+ will need to reduce quotas this year. Ahead, the Munich Security Conference commences today, with the Ukrainian war likely to dominate discussions, although no major announcements are expected today.


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  Nat Gas futures are lower on both sides of the pond. US Henry Hub futures extend losses under USD 2.50/MMBtu whilst Dutch TTF fell back under USD 50/MWh for the first time since December 2021.


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  Metals are pressured by the broader Dollar strength. Spot gold fell from a USD 1,836/oz high to a USD 1,818.97/oz intraday trough, although prices are off worst levels as the DXY retreats from highs. Base metals see losses of over 1.0% across most LME futures as risk aversion hits the industrial metals, with copper falling from a USD 8,988.50/t high to levels near USD 8,900/t.

17 Feb 2023 - 09:50- Research Sheet- Source: Newsquawk