EUROPEAN COMMODITIES UPDATE: Crude and gold remain underpinned by geopolitics despite the firmer Dollar

Crude Oil: WTI Mar +1.4%, Brent Apr +0.6%

• A firm session across crude prices this morning with WTI not experiencing a settlement on Monday amid the US Presidents' Day holiday, whilst Brent Apr settled with gains of 0.48/bbl.


• Geopolitical updates have been plentiful as US-Russia high-level delegations met in Riyadh to discuss a peace path for Russia-Ukraine (Analysis available on Newsquawk), although the meeting itself is expected to set the grounds for a Trump-Putin meeting.


• Russia's Kremlin said they cannot give an evaluation of the negotiation with US officials yet as they have only just started, and there is no understanding of a Putin-Trump meeting, although today's talks may bring more clarity. Russia's Kremlin added that Russian President Putin is ready to negotiate with Zelensky if necessary.


• Bloomberg's Blas suggested "The presence of Kirill Dmitriev among the Russia delegation in Riyadh for the Washington-Moscow talks suggest that oil is going to be on the table...Perhaps in the form of US oil sanction relief, or as a quid pro quo opening Russian oil again for American companies".


• Meanwhile, Russia's Transneft says reduction of oil pumping volumes from Kazakhstan via CPC are estimated at around 30%. Consequences of the drone strike will take 1.5-2 months to eliminate.


• Elsewhere, Lebanon said any remaining Israeli presence on Lebanese soil would be considered an occupation, and it has the right to use all means to ensure Israeli withdrawal from Lebanese land. This comes after the Israeli army pulled out of Lebanon border villages, but held five positions as telegraphed.


• Some pressure earlier this week was attributed to reports Iraq’s Kurdistan region may resume exports in March, which could see flows of some 300k BPD via the Ceyhan pipeline.


• WTI Mar currently resides in a USD 70.12-71.94/bbl range and Brent Apr sits in a USD 75.05-75.89/bbl parameter.

Nat Gas: Dutch TTF -0.8%, US Nat Gas -3.5%

• Softer price action across nat gas with European prices well under EUR 50/MWh from levels above EUR 58/MWh last week.


• US-Russia talks on a Ukrainian peace deal is likely one of the main sources of this recent pressure.


• As a reminder, Analysts at JPM suggested that they believe that a Russia-Ukraine ceasefire (not a peace agreement) is sufficient for markets to begin pricing, but JPM's view is that any ceasefire should have "hardly any implications" for oil prices but "very large" implications for European nat gas.


• Last week meanwhile, talks were reported on potential flexibility regarding storage replenishment.


• "However, storage levels are a concern for Europe. Gas storage levels fell at a fairly quick pace last week, leaving them at a little under 45% full, compared to a 5-year average of 54% full. Colder weather forecasts for the next couple of days mean that these stronger storage draws will likely continue until the weather turns milder later in the week." says ING.

Precious Metals: Gold +0.5%, Silver -1.0%, Palladium +1.8%

• Mixed trade across precious metals with mild gains seen in gold despite the firmer Dollar (to which silver is succumbing to), with the yellow metal propped up by uncertainty and geopolitics.


• As a reminder, Russian and US high-level delegations are meeting in Riyadh - Russia's Kremlin said they cannot give an evaluation of the negotiation with US officials yet as they have only just started, and there is no understanding of a Putin-Trump meeting, although today's talks may bring more clarity. Russia's Kremlin added that Russian President Putin is ready to negotiate with Zelensky if necessary.


• Elsewhere, tensions between Israel and Lebanon (not Hezbollah) seem to be ramping up as Lebanon said any remaining Israeli presence on Lebanese soil would be considered an occupation; Lebanon added it has the right to use all means to ensure Israeli withdrawal from Lebanese land. This comes after the Israeli army pulled out of Lebanon border villages, but held five positions as telegraphed.


• Spot gold resides in a current USD 2,892.07-2,915.76/oz range, with yesterday's low at USD 2,878.78/oz and Friday's range between 2,877.02-2,939.98/oz.

Base Metals: 3M LME Copper U/C

• Base metals are mostly lower amid the firmer Dollar and cautious risk tone.


• Copper futures prodded Monday's lows overnight with demand hampered amid the mixed risk appetite in Asia, coupled with a mostly lower picture in Europe.


• Copper miner Antofagasta this morning provided an outlook for the red metal and suggested: “We are encouraged by the outlook for copper as demand remains strong and global constraints, such as grade decline, ore hardness and capex inflation, are steadily limiting existing supply expansions... Copper’s unique role in energy security and electrification means that the world needs more of it, and our projects are on track to deliver industry-leading levels of responsible copper supply growth. Our strong balance sheet enables us to invest in profitable growth for the medium and long term."


• Iron ore prices ended daytime trade at +2.5% with traders citing improved steel demand and stimulus expectations from China.

18 Feb 2025 - 10:20- MetalsEU Research- Source: Newsquawk