EUROPEAN COMMODITIES UPDATE: Commodities supported by risk whilst wheat unwinds some recent gains

Analysis details (10:57)

WTI and Brent futures consolidate with a mild upside bias after the front-month contracts settled higher by over USD 3/bbl and over USD 2.50/bbl respectively yesterday. Gains in the complex come as China’s COVID situation is seemingly improving, whilst the US summer driving season also nears. The upside is capped by haggling within Europe regarding the Russian oil embargo, with two diplomats via Politico also casting doubt on whether a deal will be reached. Elsewhere, there have been reports of clashes within Libya that the desk has been monitoring, given the fragility of domestic production to unrest. Although, the Minister of Defense suggested the situation is under control. On the OPEC+ front, the way is being paved for ministers to continue with the current pact when they meet in a couple of weeks, whilst reports suggested OPEC+ production was 2.6mln below quotas in April. Sources added Russian production 1.28mln below the required level in April. As a reminder, the IEA's OMR suggested overall Russian supply is to decline by 1.6mln BPD in May and 2mln BPD in June and could expand to around 3mln BPD from July onwards. In terms of current pricing, WTI Jul resides around USD 112.50/bbl (low 111.21/bbl) whilst its Brent counterpart eyes USD 115/bbl to the upside (low 113.64/bbl). Over to metals, spot gold is buoyed by the softer Buck and extends on gains from its ~USD 1,822/oz intraday base. Base metals are relatively mixed with not much to add apart from copper prices being supported by sentiment. Focus again briefly went onto wheat futures which fell as the Indian government exempted wheat shipments to Egypt. Note, Egypt recently agreed to purchase 500k tons of wheat, with the purchases already known to be exempt from India's wheat export ban.

17 May 2022 - 10:57- MetalsResearch Sheet- Source: Newsquawk