EUROPEAN COMMODITIES UPDATE: Crude and precious metals hold an underlying bid heading into a weekend of geopolitical risk

Analysis details (09:53)

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  WTI and Brent December futures are on a firmer footing in a continuation of the geopolitically induced gains seen after the benchmarks settled higher by USD 1.10/bbl and USD 0.88/bbl respectively. The complex was lifted further in the Wall Street afternoon amid several geopolitical headlines at the time including reports that the Israel military has received the 'green light' to move into Gaza, according to ABC News citing an Israeli official. Meanwhile, a US Navy warship near Yemen reportedly intercepted multiple missiles, according to CNN citing officials. "One of the officials said the missiles were fired by Iranian-backed Houthi militants, who are engaged in an ongoing conflict in Yemen", and it was also reported that drones and rockets attacked Iraq's Ain Al-Asad airbase, which houses US forces, with multiple blasts heard inside the base, according to Reuters citing security sources. A concoction of these headlines was cited for the post-settlement gains. In terms of today’s trade, the complex has held onto yesterday’s gains and some more, despite the cautious mood across markets, as the weekend risk nears, and participants may be reluctant to hold onto bets against oil. News flow this morning for the complex has been light this morning while WTI hovers around USD 85.50/bbl (in a USD 88.88-89.60/bbl range) and Brent edges towards USD 93.50/bbl (in a USD 92.78-93.46/bbl range.) Sticking with energy, Dutch TTF is on a firmer footing with gains of 3% and closer to EUR 52/MWh level in what has been a volatile week thus far as traders juggled the Middle Eastern situation, Australia’s abating strike threats, and supply and demand balances heading into winter season.


• Over to metals, spot gold and silver retain underlying bids as the precious metals are in favour heading into a weekend of geopolitical risks. The yellow metal is poised to end the week above USD 1,975/oz after opening the week at USD 1,932.36, with the current weekly peak at USD 1,985.23/oz. Ahead, Fed speaks and geopolitical headlines will likely drive price action. Base metals are now mixed and off worst levels as the Dollar eases off highs and markets remain on standby for catalysts after an APAC session of risk-driven losses, which saw 3M LME copper dip to an intraday low of USD 7,914.50/t. Elsewhere, reports earlier today suggested China has imposed export controls on graphite (used in electric vehicles) in response to the US-led restrictions on technology sales to Chinese firms. According to the US Geological Survey’s 2023 annual report on the mineral, China was the leading global producer of graphite, accounting for about 65% of supplies in 2022.

20 Oct 2023 - 09:56- MetalsEU Research- Source: Newsquawk