EUROPEAN COMMODITIES UPDATE: Crude and metals diverge during a quiet European morning

Analysis details (10:26)

• Commodities are diverging modestly with overall action fairly tentative as the complex and markets more broadly await fresh catalysts, particularly on the banking front.


• Currently, WTI and Brent are firmer by circa. USD 0.30/bbl but reside towards the lower end of USD 1/bbl range parameters which are well within Friday’s and by extension recent ranges. Crude has been following the tone of European trade so far, a session which features modestly firmer price action with fundamental updates thin and the upside seemingly spurred by a no news is good news feel after a weekend with no significant negative banking updates.


• For energy specifically, focus remains on the strike action in France with the Dunkirk LNG terminal expected to see disruption resume on Tuesday while the US’ Commerce City Colorado refinery (98k BPD) has reported an incident this morning.


• Elsewhere, there has been a handful of geopolitical developments. Namely, North Korea fired two suspected ballistic missiles towards the East Sea which landed outside of Japan’s exclusive economic zone while Russian President Putin said Moscow will station tactical nuclear weapons in Belarus. The latter has drawn strong pushback from numerous world leaders, though the US says they have not seen a reason to adjust the nuclear posture nor indications that Russia is preparing to use a nuclear weapon.


• For the session ahead, the docket is devoid of fundamental drivers specifically for the complex and as such action will likely continue to be at the whim of broader price action where the focus remains on the banking sector and policymakers’ response to it.


• Moving to metals, spot gold is softer given the constructive European tone and as the USD retains an underlying bid with the DXY above 103.00. Action which has pressured the yellow metal to a USD 1965/oz intraday low, but one that is well within last week's USD 1934-2009/oz bounds. Technically, if the downside intensifies, the 10-DMA resides at USD 1955.30/oz. Despite the firmer risk tone, base metals are somewhat softer given the mentioned USD upside and perhaps as the performance of US futures has been more tentative and negative at times thus far.

27 Mar 2023 - 10:26- MetalsEU Research- Source: Newsquawk