EUROPEAN COMMODITIES UPDATE: Crude attempts to nurse some losses while industrial metals are subdued but precious metals shine

Analysis details (09:36)

• WTI and Brent Jan futures have been picking up after consolidating around USD 73.25/bbl and USD 77.50/bbl respectively overnight. Prices plunged on Thursday to their lowest levels since July on the back of weak US economic data, adding to the bearish energy inventory data on Wednesday. Selling velocity picked up after the larger declines than expected in the US industrial production data for October, coming on the heels of the rising jobless claims figures. The bearish momentum became more pronounced after WTI Dec and Brent Jan futures broke beneath their Nov (8th) lows of USD 74.91/bbl and 79.20/bbl, respectively, with the downside extending through the rest of the US session to see troughs printed at USD 72.16/bbl and 76.60/bbl ahead of settlement - WTI Jan contacted notched a low of USD 72.37/bbl yesterday. There were no fresh catalysts on the supply side to explain the losses Thursday, although several desks continue to point to Wednesday's US crude stocks build. Since settlement yesterday, the contracts have traded horizontally as they take a breather in the absence of any major macro headlines/developments through to the European morning, but momentum picked up in recent trade in conjunction with a Dollar pull-back and amid reports that Iraqi armed factions said they targeted the Harir base (hosts US forces) in northern Iraq, according to Al Arabiya. That being said, the gains are minimal in the context of yesterday’s decline. This week’s downside comes ahead of the OPEC+ meeting on Nov 26th, which ramps up pressure on the group to extend or deepen existing cuts. “The price weakness we are seeing means that it is increasingly likely that the Saudis will roll over their additional voluntary cut of 1mln BPD into early next year. Doing this should help erase the expected surplus and provide some support to the market”, say the analysts at ING.


• Metals markets are mixed with gains seen across precious metals and losses across most base metals. Spot gold inches closer towards USD 2,000/oz as it trades just under the 6th November peak of USD 1,993.15/oz whilst spot silver topped USD 24/oz once again in what looks to be five days of back-to-back gains for the metal at the time of writing. Base metals are softer amid broader weakness in industrial commodities with 3M LME copper briefly dipping under USD 8,200/t (vs USD 8,258/t high), while Dalian iron ore futures fell overnight with some citing a continuation of the recent Chinese intervention in the market, but participants note that losses were cushioned by signs of recovery in steel demand, citing recent data from the China Iron and Steel Association which showed crude steel production at major mills increasing by 2.4% from late October. Elsewhere, LME zinc remains on the backfoot following yesterday’s mammoth increase in on-warrant zinc stockpiles – “Most inflows were reported from warehouses in Singapore and Port Klang, Malaysia. Meanwhile, total exchange inventories increased by 65,075 tonnes to 133,200 tonnes as of yesterday, the highest since 12 September”, according to ING, with a modest draw in LME stockpiles reported this morning.

17 Nov 2023 - 09:38- Research Sheet- Source: Newsquawk