EUROPEAN COMMODITIES UPDATE: Commodities unwind geopolitical premium, but crude feels extra pressure from COVID in China

Analysis details (10:08)

WTI and Brent front-month futures continue to feel pressure amid the positive geopolitical noises heard from both Russia and Ukraine over the weekend, whereby officials on Sunday gave their most upbeat assessments so far on the progress of talks and suggested there could be positive results within days. That being said, the weekend Russian strikes on a training facility near the border with Poland provides some concerns. Further, the complex is pressured by multiple lockdowns and COVID restriction tightening across China, including Shenzhen and Shanghai – where residents are told not to leave the city. Elsewhere, Iranian nuclear talks seemingly hit a roadblock amid outstanding issues. Over the weekend, the Russian Foreign Ministry said Russia will stop supplying gas to Europe if required. According to officials, India is considering a Russian offer to sell oil and other commodities at a discount amid sanctions and is working on an INR-RUB settlement mechanism for Russian oil and commodities. Elsewhere, a US defence official said missiles had been launched at Erbil, Iraq from Iran, AP reported Saturday. In terms of recent trade, the crude complex saw losses exacerbated in conjunction with comments from IEA Chief Birol who said responsible producers should increase oil output. WTI Apr’ resides around under USD 105/bbl (vs high 109.72/bbl) after taking out Friday low, whilst Brent May trades below USD 109/bbl (vs high 113.15/bbl). Over to metals, spot gold is softer amid an apparent unwind in geopolitical premium and ahead of the mid-week FOMC, with the yellow metal approaching Friday’s lows. Spot palladium is losing its shine and falls over 9% following the recent Russia-induced gains. Copper declines amid the cautious risk tone in China overnight and softness across the commodities complex, whilst there were also reports that China is planning to boost its coal output by as much as it imports.

14 Mar 2022 - 10:07- MetalsGeopolitical- Source: Newsquawk