EUROPEAN COMMODITIES UPDATE: Crude and gold pull back further, Russia/Ukraine remains in focus

Analysis details (10:52)

WTI and Brent futures are choppy and have been coming off today’s highs following an overnight session of consolidation. WTI Apr is back under 93/bbl (vs high 95.64/bbl) and Brent Apr is back under USD 100/bbl (high 102/bbl). The complex will likely keep eyeing further geopolitical escalations in the run-up to the OPEC+ meeting next week. OPEC+ producers could opt to maintain the current policy of 400k BPD monthly hikes. The upcoming meeting will be more complex than the recent confabs after recent major events including Russia’s invasion of Ukraine, and progress on the Iranian Nuclear Deal. OPEC+ delegates cited by Energy Intel believe the risk premium crude prices around the on 25th Feb, was some USD 10-15/bbl. Note, some business channels have been flagging the idea that Saudi could attempt to control Russia in a move similar to the 2020 price war – but it would be in Saudi’s best interest to not get involved. OPEC+ members will, however, have to discuss the inclusion of Iran in its output quotas given the progress flagged by both sides in recent days on the revival of the nuclear deal. An Iranian official said if US sanctions are lifted, Iran could boost its oil output to 4mln BPD from 2.5mln in about 3 months, according to Energy Intelligence. Despite sanctions, Argus estimates that Iran exported 789k BPD of crude in January (vs 705k Q4 2020 average vs 2.3mln BPD pre-sanction exports). Elsewhere, spot gold has pulled back from best levels after finding early resistance around USD 1,922/oz, with the yellow metal hovering around USD 10/oz above USD 1,900/oz at the time of writing, Overnight, Chinese coal prices slumped after China said it will limit the price of coal in the three largest mining regions in the country.

25 Feb 2022 - 10:52- EnergyResearch Sheet- Source: Newsquawk