EUROPEAN COMMODITIES UPDATE: Commodities weighed on by Dollar-driven pressure but nickel bucks the trend

Analysis details (09:56)

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  WTI And Brent front-month futures have been trundling lower since APAC hours despite a lack of fresh catalysts but against the backdrop of soured market sentiment in the run-up to a plethora of macro risk events – including the FOMC, BoE, ECB, US ISMs and US NFP. From a more crude-specific standpoint, the OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting tomorrow is expected to be a non-event, as telegraphed by various sources since last week, with the committee observing market developments in an uncertain environment. The JMMC will meet on Wednesday to take stock of energy market fundamentals, this will not be a decision-making meeting – with the next OPEC+ Ministerial Meeting currently slated for 4th June 2023. Sources via Bloomberg and Reuters suggested the wait-and-see approach expected by the JMMC is amid a tentative recovery in global demand. The recovery optimism arises from a combination of mounting calls for less-severe-than-expected recessions/GDP slowdowns, coupled with China abandoning its zero-COVID policy and reopening its markets. On that note, overnight, the IMF raised its 2023 global GDP growth forecast to 2.9% from 2.7% citing resilience in advanced economies and China reopening but cut its 2024 global GDP growth forecast to 3.1% from 3.2% due to steeper monetary policy tightening. WTI March has dipped under USD 77/bbl (from a USD 78.14/bbl high) while its Brent counterpart fell under USD 83.50/bbl (from a USD 84.80/bbl high).


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  Nat gas futures are once again diverging with US Henry Hub Natural Gas modestly softer intraday amid the continued prospect of milder-than-expected weather. Dutch TTF futures meanwhile are firmer but remain within the recent EUR 55-60/MWh range. Desks suggest European gas storage remains over 70% full vs the 5yr average of 53%.


• In terms of metals, spot gold has slipped from USD 1,927.36/oz to levels closer to USD 1,900/oz, but above its 21 DMA at 1,901.11/oz. Base metals are mostly softer with the exception of LME nickel after the Philippines, yesterday, said it is considering taxing nickel ore exports – the Philippines is the second largest supplier of the metal. Meanwhile, LME copper is on the backfoot amid the downbeat risk tone in conjunction with the firmer Dollar – with the red metal dipping under USD 9,100/t from a 9,210/t intraday peak. Elsewhere, MMG’s Las Bambas copper mine (one of Peru’s largest copper mines), said it will pause copper production if transport disruptions arise from the social unrest in the region. MMG said Las Bambas has mobilised its site security team and the property remains secure. MMG provided a 2022 update in which total 2022 copper production was -10% vs 2021, whilst Las Bambas production was -12% vs 2021.

31 Jan 2023 - 10:00- Research Sheet- Source: Newsquawk