EUROPEAN COMMODITIES UPDATE: Continued crude consolidation with metals dented by risk and USD

Analysis details (10:35)

• Another session of consolidation for the crude benchmarks, continuing Wednesday’s pullback, despite bullish inventory data and Saudi lifting its Asia OSPs, with markets broadly looking to Fed speak and US data points. Strike action at Chevron’s LNG facilities in Australia has been pushed back from the scheduled start of today until Friday. Spot gold is benefitting from the subdued risk tone ahead of data and Fed speak while base metals pullback in-line with APAC trade despite better-than-feared Chinese trade figures.


• WTI and Brent are posting downside of around USD 0.60/bbl each, in a continuation of the pullback from the Saudi/Russia induced WTD best. Action that comes with fundamentals for the complex light this morning after the delayed (due to Labor Day) Private Inventory data which was bullish overall; posting a larger-than-expected headline draw of 5.5mln ahead of the EIA release at 16:00BST where a crude draw of 2.064M (prev. -10.584M) is forecast. Additionally, Saudi Arabia has announced it is lifting its OSP to Asia for Arab light by 0.10/bbl. However, this increase does disappoint earlier sources via Reuters that the OSP for Arab light could increase by circa. 0.45/bbl.


• On LNG, the expected Chevron strikes have been delayed by around 24 hours while talks continue. Mediators and the union haven’t provided much insight into how the discussions are progressing with the threat of limited action now from Friday morning ahead of the potentially more impactful industrial action from September 14th. Action which could see rolling full stoppages initiated that have the potential to take over 5% of global LNG supply out of action.


• Moving to metals, spot gold is incrementally firmer and gleaning some support from the risk tone though upside is capped by ongoing USD advances. Currently, the yellow metal lies just above the 200-DMA of USD 1918/oz with the 21- and 10-DMAs either side at USD 1915/oz and 1929/oz respectively. Base metals are similarly afflicted by the USD and overall tone, with further pressure stemming from the subdued APAC handover as Chinese trade data was poor, though the key import metric was markedly above the prior and better than consensus.

07 Sep 2023 - 10:32- Research Sheet- Source: Newsquawk