EUROPEAN COMMODITIES UPDATE: Crude and Industrial metals remain pressured by risk, while spot gold’s underpinned by geopolitics ahead of NFPs
Analysis details (09:36)
WTI and Brent front-month futures remain pressured after both benchmarks settled around USD 1.00/bbl lower amid a sharp deterioration in global risk sentiment. The drop in sentiment emanated from the stock markets and was sparked by woes surrounding the banking sector (click here for the Newsquawk analysis piece). Focus today will turn to the US jobs report whereby a hot release will likely solidify expectations for a more hawkish Fed, and would likely lead to a weakening of risk assets. In terms of more crude-specific fundamentals, some French refineries continue to see their operations disrupted amid the ongoing strikes, which are blocking fuel deliveries from several refineries. “The lack of movement in the gasoil crack suggests there is little concern from the market at the moment. Middle distillate stocks in the ARA region remain comfortable. The latest data from Insights Global shows that gasoil inventories stand at 2.49mt, down 29kt over the week, but still above the 5-year average”, suggests ING. WTI April trades around USD 75/bbl after dipping from a USD 75.78/bbl high, while Brent May oscillates around USD 81.00/bbl (vs a high of USD 81.75/bbl).
Gas markets again experience a divergence with Dutch TTF May future on a firmer footing intraday and briefly topping EUR 48/MWh before declining back sub-EUR 46/MWh, with wintery weather forecast across northern Europe. US Henry Hub futures trade modestly softer but still north of USD 2.5/MMBtu following the pressure from the EIA’s gas storage report yesterday. “A milder winter has meant more limited draws from storage, while the Freeport LNG outage would have added to the softer domestic supply & demand picture. Freeport LNG has received approvals to restart in recent weeks, which should see US LNG exports edge higher in the coming weeks.“, says ING.
- In terms of metals, spot gold sees modest gains in the run-up to the US jobs report later today (full Newsquawk analysis available in the Research Suite), with the Dollar index largely contained to a tight pre-NFP parameter. Desks also flag the lingering geopolitical concerns, with reports yesterday suggesting Russia is planning a "large-scale provocation" on Belarus' border with Ukraine "in the near future," potentially involving destruction of infrastructure facilities and victims among civilians, according to Kyiv Independent citing sources. Spot gold managed to mount its 21 DMA (1,834.99/oz) and yesterday’s USD 1,835.73/oz high from a USD 1,827.84/oz base. Base metals are mostly softer amid the broader risk aversion, with the deepest losses seen in LME nickel, while 3M LME copper extends losses under USD 9,000/t.
10 Mar 2023 - 09:43- Research Sheet- Source: Newsquawk
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