EUROPEAN COMMODITIES UPDATE: Commodities rebound following Tuesday’s risk-off sell-off

Crude Oil: WTI/ Brent +0.5%

• Crude benchmarks dipped at the start of the APAC session as Asian equities followed the sell-off seen stateside but gradually reversed as the European session got underway as risk sentiment improved a little. WTI and Brent dipped to a trough of USD 60.02/bbl and 63.92/bbl respectively before reversing to a peak of USD 60.90/bbl and 64.78/bbl as European players entered the market. Currently, crude benchmarks remain near session highs as markets wait for a new catalyst to drive the oil market. In the meantime, US ADP/ISM Services will keep markets busy.
• Following the Ukrainian drone attack at Russia’s Tuapse refinery, it was reported by Reuters citing sources that the refinery has stopped fuel exports and processing oil. Crude benchmarks have continued to drive higher as this limits global oil supply.
• Crude stocks are expected to see a slight build of 0.603mln after 2 weeks of larger-than-expected draws. Private inventory data late in Tuesday’s session saw a mixed report with a larger-than-expected build in headline crude stockpiles, but wider-than-expected draws for gasoline and distillate inventories.

Precious Metals: XAU +0.9%/ XAG +1.1%

• Spot XAU has rebounded from Tuesday’s selloff, which moved counter to the wider risk theme running through markets. XAU fell just shy of Tuesday’s low of USD 3928/oz at the start of the APAC session before trading higher to a peak of USD 3979/oz as the European session got underway. The yellow metal briefly extended higher to USD 3987/oz but has since fallen back into prior ranges.
• After falling over 12% from ATHs, there is a wider consensus that the pullback is mostly over as underlying drivers still remain strong. A drop in ETF withdrawals, continued central bank buying, expectations of further Fed cuts and global debt concerns are all reasons cited by analysts for XAU to return to ATHs.

Base Metals: 3M LME Copper +0.1%

• Base metals have traded rangebound as the European session gets underway after 3M LME Copper fell for 4 straight days, its longest losing streak since late July. 3M LME Copper oscillates in a USD 10.58k-10.71k/t band as markets wait for a catalyst.