EUROPEAN COMMODITIES UPDATE: Commodities pressured by weak Chinese PMI and ongoing COVID woes

Analysis details (09:25)

WTI Dec and Brent Jan are softer intraday around USD 87/bbl (vs high 88.65/bbl) and 93/bbl (vs high 94.48/bbl) respectively, with the mood across the complex damped by China’s COVID woes, a firmer Dollar, and the fragile risk tone across markets. To elaborate, China’s Shanghai Disney Resort suspended operations today due to COVID controls, Macau required residents to undergo three days of rapid Covid tests and locked down MGM China’s (2282 HK) Cotai casino resort, and Foxconn's (2354 TT) Zhengzhou plant may see up to 30% of the factory's November shipments of Apple (AAPL) iPhones impacted by the COVID situation. The complex is experiencing demand-side headwinds from Asia heading into the US mid-term elections next week, with US Energy Envoy Hochstein reiterating that the US has called on oil producers to increase output whilst US President Biden said that oil companies who complain he is picking on them “ain’t seen nothing yet”. This week also sees the ADIPEC 2022 energy conference with several industry heads due to speak, although it is difficult to envisage any fresh fundamental updates for the complex being announced at the gathering. As a reminder, OPEC+ will next be convening in December, whilst the UAE Energy Minister said the country is keen on supplying the world with the supplies it needs, OPEC+ has a mechanism to get together if requirements are there. Over to metals, spot gold remains under USD 1,650/oz and sees mild pressure from the Dollar edging higher but the yellow metals on standby for this week’s FOMC and US jobs report. Finally, LME metals are lower across the board amid the stronger US, weak Chinese PMIs, and aforementioned Chinese COVID updates dampening the demand side of the equation, with 3M copper back under the USD 7,500/t mark. 

31 Oct 2022 - 09:25- MetalsData- Source: Newsquawk