EUROPEAN COMMODITIES UPDATE: Contained trade with drivers limited pre-Powell

Analysis details (10:50)

• Crude benchmarks are little changed overall on the session, WTI Feb and Brent Mar have been moving either side of the unchanged mark for much of the morning within fairly slim ranges just above USD 1.00/bbl at present. However, the complex has most recently extended to incremental fresh highs, though the ‘peaks’ are modest at best and particularly when compared to recent session highs of USD 76.74/bbl and USD 81.50/oz in WTI, for instance.


• For crude explicitly, Barclays remains constructive on the space reiterating its Brent 2023 forecast of USD 98/bbl; writing there is the potential for USD 15-25/bbl of downside if the slump in global manufacturing worsens.


• In terms of newsflow, updates have been slim and unable to meaningfully more the dial thus far, as all attention is on the hefty Central Bank docket for today, with Fed Chair Powell the afternoon highlight. Thus far, the main update has been from the Russian Defence Minister Shoigu who said that Moscow will develop its nuclear triad and be the main guarantee of Russian sovereignty, according to Interfax; the triad refers to a military force of land-launched, submarine and aircraft nuclear capability.


• Elsewhere, and perhaps an incremental factor on the demand side, China has suspended visa issuance to Japan and South Korea following their "discriminatory entry restrictions against China".


• Moving to metals, spot gold and silver are diverging a touch and remain in close proximity to the unchanged mark in similarly narrow ranges. On the yellow metal, BofA writes that US rates and FX will become macro tailwinds, pushing it above USD 2k/oz in the coming months. Elsewhere, base metals are fairly contained overall though with a slight negative bias as the tone from APAC trade filters through.

10 Jan 2023 - 10:45- Research Sheet- Source: Newsquawk