EUROPEAN COMMODITIES UPDATE: Constructive sentiment and a softer dollar underpin gains in industrial commodities

Analysis details (09:45)

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  WTI and Brent May futures are on the rise as risk sentiment and a softer dollar keep the complex underpinned after the contracts settled marginally lower yesterday following a choppy session. News flow for the complex has been light overnight and in the European morning, with desks continuing to cite the halt in Kurdish oil flows via Turkey as a reason prices are underpinned. Furthermore, yesterday the US Energy Secretary also suggested that the US could start refilling its Strategic Petroleum Reserve (SPR) later this year, but it will be difficult to start filling the SPR at the moment amid maintenance and the mandated release of 26 million barrels. WTI trades just off session highs in a USD 72.61-73.70/bbl range, while its Brent counterpart sits towards the top end of a USD 77.18-78.25/bbl intraday parameter.


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  Gas futures are subdued, with Dutch TTF trading on either side of the unchanged market (and under EUR 43/MWh) while US Henry Hub falls further from USD 2.25/MMBtu, and closer to USD 2.10/MMBtu. Reports yesterday, via Reuters, suggested natural gas flows to Freeport LNG's Texas export plant are set to reach their highest level since June 2022 shutdown, according to Refinitiv data – “Energy traders said gas flows at that level likely signal Freeport LNG started the third of three liquefaction trains at the plant”, the report said. Liquefaction trains turn gas into LNG ready for export. Gas flows are expected to rise to 1.8 billion cubic feet per day (bcfd), up from 1.6 bcfd on Tuesday – when operating at full capacity, Freeport LNG can convert some 2.1 bcfd of gas into LNG, the report added.


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  Metals trade with cautious gains as the dollar loses ground in early trade. Spot gold sits within a USD 1,955.41-71.60/oz range as the yellow metal moves largely in tandem with the DXY. Sticking with precious metals, analysts at Citi see Palladium prices retesting 1600/oz in a three-to-six-month period, on the back of OEM buying recovering, precious metals being in a bull market and global supply risks. However, the bank cut its 2023 forecast for the metal to USD 1,500/oz from USD 2,025/oz. Citi also sees Platinum’s price rising towards USD 1,050/oz in a six-to-twelve-month period. Industrial metals are now mostly firmer following a mixed European start, with 3M LME copper holding a mild positive bias above USD 9,000/t, influenced by the dollar and broader sentiment. Finally, desks note that cobalt prices have dropped over 30% YTD, with Jervois Global Ltd. halting construction at its Idaho cobalt mine in the US due to declining cobalt prices and rising construction costs. The project was nearing completion and expected to produce 2,000 tonnes per year.

30 Mar 2023 - 09:49- Research Sheet- Source: Newsquawk