EUROPEAN COMMODITIES UPDATE: Crude awaits JCPOA developments while Aluminium leads amid production shutdowns

Analysis details (10:50)

• Crude benchmarks are currently little changed overall, having recovered from a bout of initial pressure that sent WTI Sep’22 and Brent Oct’22 to respective USD 85.88/bbl and USD 91.51/bbl lows; though, WTI is incrementally above Tuesday’s 85.73/bbl low but Brent is now below its equivalent level.


• Newsflow for the complex has been relatively thin for much of the session, following last night’s Private Inventory report which printed a headline draw marginally above expectations alongside a sizeable 4.5mln draw in Gasoline. Thus far, participants have largely been waiting for any Iran-related developments, as the EU is expected to respond by end-Wednesday; though, developments on this have been very minimal. While we await a reply, it is worth highlighting the view of RBC on the situation who believe that a near-term breakthrough is unlikely unless there is a last-minute alteration to Iran’s negotiating positions. And from the US perspective, write that a new deal would be subject to substantial Congressional scrutiny and pushback likely from both sides of the aisle.


• Elsewhere, OPEC Secretary General Haitham Al Ghais says he see a likelihood of an oil-supply squeeze this year, and is open for dialogue with the US. Remains bullish on oil demand for 2022, adding that it is too soon to call the outcome of the September 5th gathering. On the supply side, cautioning that spare capacity is around the 2-3mln BPD mark, which is “running on thin ice”. Evidently, such commentary adds further pertinence to a potential Iranian nuclear agreement.


• Moving to metals, spot gold is little changed overall but with a slight negative bias as the USD remains resilient and outpaces the yellow metal as the haven of choice at this moment in time. Base metals are under modest pressure given the USD’s strength; though, Aluminium is the clear outperformer amid updates from Norsk Hydro that they are shutting production at their Slovalco site (175k/T year) by end-September, due to elevated energy prices.

17 Aug 2022 - 10:50- MetalsEU Research- Source: Newsquawk