EUROPEAN COMMODITIES UPDATE: Commodities slump as COVID crackdowns intensify alongside USD upside
Analysis details (10:35)
- Crude benchmarks are under modest pressure this morning -0.6%, as the complex reacts to the latest demand-side headwind of fresh China COVID restrictions. To briefly recap, over the weekend several areas announced fresh restrictions which include renewed testing requirements and lockdowns after the first COVID-related deaths in around a six-month period. In the European morning, Beijing city reported 316 infections in the day to 15:00 and subsequently testing requirements have been tightened for travellers. While the Beijing city updates sparked limited crude reaction, the APAC developments pressured the complex to USD 79.12/bbl and USD 86.40/bbl troughs for WTI and Brent respectively; though, this is still over a dollar from USD 2/bbl from Friday’s respective USD 77.24/bbl and 85.80/bbl lows.
- Pressure which is also being exacerbated by a renewed bout of USD strength, with remarks from Fed officials over the weekend alongside COVID and associated Yuan downside a driver.
- On the supply side, though somewhat overshadowed by the above narrative at present, BP confirmed that the Rotterdam Refinery (400k BPD) has been taken out of operation and subsequently the union has hampered its resumption by stating staff will not assist in the restart unless wage demands are attained.
- For metals, spot gold/silver are unable to glean any haven-related upside in wake of the USDs strength, with the yellow metal over USD 10/oz below the USD 1751/oz 10-DMA despite briefly surpassing the figure overnight. Additionally, base metals are slipping across the board given the aforementioned COVID headwinds; for instance, LME Copper has given up the 8k mark and is currently lower by over 1.5% on the session.
21 Nov 2022 - 10:35- MetalsResearch Sheet- Source: Newsquawk
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