EUROPEAN COMMODITIES UPDATE: Comparatively steady action amid a USD reprieve

Analysis details (10:35)

Crude is modestly bid, +USD 0.80/bbl, though newsflow explicitly for the complex has been relatively slim though this isn’t stopping fairly pronounced price action across other assets thus far. Notably, the last few sessions have featured substantial crude downside amid broader price action and pronounced USD strength, with the currency seemingly taking a breather from its rampant climb and as such WTI and Brent are deriving some respite. In terms of specific developments, last night’s private inventory data printed an unexpected build of 3.8mln for the headline while the internals were somewhat mixed amid a cushing build coupled with draws for distillate and gasoline. Ahead, today’s EIA release is expected to post a draw of around 1mln; reminder, the data is slated for 16:00BST/11:00ET owing to Monday’s market holiday. Most recently, Bloomberg reports that China is considering stimulus coupled with unprecedented bond sales, a report which has lifted benchmark back to overnight best levels. Turning to bank commentary, JPM writes that the selloff for energy is overdone and stocks are now pricing a longer-term Brent target nearer to USD 60/bbl; highlighting significant recession focus alongside a failure to discount the possibility of demand outstripping diminishing capacity. Moving to metals, spot gold is little changed overall given the comparatively tame USD action, as mentioned, at this point in time; technically, given the magnitude of recent moves, the yellow metal is over USD 60/oz from the nearest DMA support. Futurestechs highlights USD 1750.70/oz and USD 1735-37/oz as the next respective resistance/support levels. On the topic, BofA has downgraded its FY22 forecast to USD 1938/oz (prev. 1957), alongside a slew of forecast cuts to metals across the board, full details available here; notably, they write that copper could move below USD 6k/T in the coming months.

07 Jul 2022 - 10:35- EnergyResearch Sheet- Source: Newsquawk