EUROPEAN COMMODITIES UPDATE: Crude and gold underpinned by less constructive geopolitics whilst LME nickel opens limit down again

Analysis details (10:25)

WTI and Brent front-month have been coming off best levels in recent trade but have been grinding higher since the start of electronic open with several weekend headlines driving price action. Firstly, reports over the weekend suggested that the EU government will consider whether to impose an oil embargo on Russia over its invasion of Ukraine, suggesting that "Baltic countries including Lithuania are pushing for an embargo as the next logical step, while Germany is warning against acting too quickly". That being said, it’s worth being aware that Germany and France are some of the largest importers of Russian energy and reports via Eurasia Group on Friday (citing Senior EU officials) said "there is no appetite among member states - bar Poland & Baltics - for energy import bans against Russian coal, oil & certainly not gas" whilst stating that “The threshold for energy import bans is very high.”. Further, constructive progress on the Russia-Ukraine is yet to be seen, and with Russia seemingly upping the ante with media reports of hypersonic missiles and thermobaric missiles used against Ukraine. Russia’s Kremlin suggested the progress of peace talks with Ukraine is not as big as it should be and there is no basis for a possible Putin-Zelensky meeting, as significant progress needs to be made first, whilst a ceasefire will not be put in place during negotiations. There were also reports that Aramco’s petroleum products distribution plant in Jeddah was attacked and production at a Saudi oil refinery in Yanbu declined momentarily after a Houthi attack. In terms of the Iranian nuclear deal, Iran has rejected as "inaccurate" the claim made by Irish FM Coveney that an agreement on the revival of the JCPOA could be reached within 48 hours – reported via Iranian Media on Saturday. Adding that “nothing has changed in Vienna talks since a few days ago, and still, everything depends on US' political decision”, citing officials close to the Iranian Supreme National Security Council. WTI May resides around USD 107/bbl (vs high ~108.20/bbl) while its Brent counterpart trades just under USD 112/bbl (vs high ~112.75/bbl). Over to metals, spot gold has been erring higher but remains around USD 1,925/oz, partly due to the declines in the Buck coupled with a less constructive diplomatic picture regarding Russia/Ukraine. Elsewhere, LME nickel slumped 15% to hit the recently tweaked limit down (from 12% to 15% effective today) as the exchange continues to tackle irregular trade in the market.

21 Mar 2022 - 10:24- EnergyResearch Sheet- Source: Newsquawk