EUROPEAN COMMODITIES UPDATE: Crude and gold unwinds geopolitical risk premium while base metals cheer softer regional CPIs and better-than-expected German Q3 GDP

Analysis details (09:49)

• WTI and Brent futures are softer intraday amid an unwinding of the geopolitical risk premium that baked in on Friday, as the weekend lacked any major regional escalation. Although, recent reports suggest a potential large-scale Israeli operation in Gaza, with Israeli tanks on the outskirts of Gaza City reportedly blocking the road between the north and south of the Strip. Nonetheless, crude markets remain heavy with WTI Dec around USD 84/bbl (in a USD 83.71-85.30/bbl range), while Brent Jan trades under USD 88/bbl (in a USD 87.51-88.94/bbl parameter). Aside from geopolitics, weekend reports suggested Saudi Arabia may refrain from raising its flagship oil price for Asian customers for the first time in six months as refinery margins weaken across the region which undercuts demand for physical cargoes, according to Bloomberg.


• Over to metals, spot gold has, in a similar way to crude, been unwinding some geopolitical risk premium with prices back under the USD 2,000/oz mark from a USD 2,006/oz intraday high, and still within Friday’s USD 2,009.56-1,976.92/oz range. Base metals are higher across the board following a pick-up in sentiment after the European cash open, particularly amid the softer Spanish and German state CPI metrics coupled with better-than-expected flash German Q3 GDP, with 3M LME copper extending gains above USD 8,100/t after testing the level to the downside earlier in the session. Elsewhere, Glencore's Q3 production report saw FY23 production guidance for copper, zinc, coal, and cobalt maintained in line with their prior guidance, while nickel guidance was cut.

30 Oct 2023 - 09:49- Research Sheet- Source: Newswires