EUROPEAN COMMODITIES UPDATE: Crude and precious metals continue grinding higher as weekend geopolitical risks loom

Analysis details (10:11)

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  WTI and Brent front-month futures are on the grind higher on Friday despite a lack of fresh fundamentals but with traders likely wary to bet against crude heading into the weekend as geopolitical risk remains at the forefront for the complex. In terms of updates from the Middle East, reports vis Sky News Arabia suggested Israel’s ground military is building up on the Gaza Strip border, meanwhile, the Lebanese Foreign Minister warned “that the continued escalation and invasion of Gaza will ignite the entire region". This comes as the Iranian Foreign Minister is meeting with Lebanon’s Hezbollah head. Away from the Middle East, the morning saw commentary from Russian Deputy PM Novak who suggested settlements in USD and EUR for Russian oil trade remain but have declined significantly, while the discount to Russian oil on the global market to international benchmarks stabilised at USD 11-12/bbl from USD 35-38/bbl in early 2023. Price action today has been gradual but a clear upward trend, with WTI Nov topping USD 85/bbl (from a USD 83.35/bbl low) while Brent Dec roses towards USD 88.50/bbl (from a USD 86.28/bbl trough). Over to gas markets, Dutch TTF is firmer intraday as prices for the Nov contract eye USD 54/MWh to the upside, potentially partially buoyed by action in the crude complex, but also amid the Australian LNG strike threats, this week’s suspected Finnish pipeline sabotage, and as the West heads into the cooler seasons.


• Over to metals, precious metals are buoyed by what is seemingly a combination of geopolitical risk premium coupled with a softer Dollar. Spot gold had been edging higher to test yesterday’s USD 1,884.79/oz high after topping its 21 DMA at USD 1,877.90/oz, with clean air seen from a technical standpoint until the 50 DMA (1,899.98/oz). Spot silver also benefits and is back on a USD 22/oz handle ahead of yesterday’s USD 22.24/oz peak. Base metals are mixed with little reaction seen to the release of Chinese inflation and trade data overnight, with the data showing iron ore and copper imports fell in September, the former amid shrinking steel margins and the latter amid strong domestic production, according to Reuters. 3M LME copper is poised for a second straight week of declines with some participants citing the “higher-for-longer” mantra seen by major global central banks coupled with Chinese property concerns.

13 Oct 2023 - 10:15- Research Sheet- Source: Newsquawk