EUROPEAN COMMODITIES UPDATE: Commodities pressured by the firmer Buck, but Dutch TTF diverges

Analysis details (10:13)

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  WTI March and Brent April futures are softer intraday after settling lower by over USD 1/bbl apiece following the post-US CPI whip-saw - which ultimately resulted in pressure across the complex amid a hawkish movement in Fed pricing. This was later followed by a much larger-than-expected build in private inventory crude stocks (+10.5mln exp. +1.1mln), whilst the products were mixed – with participants awaiting today’s weekly EIA inventories for confirmation. Elsewhere, the IEA’s monthly oil market report chimed with that of OPEC and EIA as it upped its 2023 global underlying demand growth forecast by 200k BPD (vs OPEC’s +100k BPD and EIA’s +60k BPD), while it warned that “World oil supply looks set to exceed demand through the first half of 2023, but the balance could quickly shift to a deficit as demand recovers and some Russian output is shut in.” Aside from the above, updates for the crude complex have been light with prices weighed on by the firmer Dollar and cautious risk tone, with WTI towards the bottom of a USD 77.61-78.96/bbl range, while Brent sits under USD 84.50/bbl from a USD 85.46/bbl high.


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  Gas markets are seeing some mild divergence between the US and EU benchmarks, with the former consolidating within this month’s range, while Dutch TTF posts gains of some 3% at the time of writing. Recent reports via Bloomberg suggested that the European Commission is poised to discuss an extension to the demand cut beyond March. As it stands, the EC agreed on voluntary demand cuts of 15% below the 5yr average between August 2022 and March 2023. Analysts at ING “believe that Europe will need to continue to see demand destruction through the course of the year in order to ensure the market is kept in balance. However, we believe demand cuts needed beyond March can be more modest at around 10%. This assumes we see no further declines in Russian pipeline gas flows to the region.”


• Over to metals, a firmer Dollar is weighing on the broader complex. Spot gold is extending on losses under its 50 DMA (USD 1,858.27/oz) as it tested the January 6th low at USD 1,831.42/oz, with the next potential supports the January 5th and 3rd troughs at USD 1,825.13/oz and USD 1,823.79/oz respectively. Elsewhere, base metals are lower across the board amid the firmer Dollar and overall downbeat risk tone, with 3M LME copper extending on losses under USD 9,000/t to breach USD 8,900/t to the downside in recent trade.

15 Feb 2023 - 10:13- Research Sheet- Source: Newsquawk