EUROPEAN COMMODITIES UPDATE: Crude choppy but gold awaits a concrete catalyst ahead of US inflation

Analysis details (10:55)

WTI and Brent front month futures are choppy as markets weigh supply/demand-side dynamics with geopolitical updates. In terms of geopolitics, there have been no concrete easing steps on the Russia/Ukrainian front despite the vague optimism expressed by French President Macron earlier this week. Further, the US-Russo relationship sees additional strain amid the US defence deal with Ukraine, a deal Moscow dubbed as provocative. Despite the numerous visits from European leaders to the region in recent days and weeks, Russia will most likely derive its stance from the US/NATO response to the Russian security proposals. Elsewhere, Iran unveiled a long-range ballistic missile a day after the resumption of nuclear talks which see some sticking points despite recent constructive noises. Yesterday, the EIA STEO was released – with the agency expecting Brent prices to average USD 90/bbl in February "as continuing draws in global oil inventories in our forecast keep crude oil prices near current levels in the coming months." EIA also sees downward price pressures to emerge in the middle of the year as growth in oil production from OPEC+, the United States, and other non-OPEC countries outpaces slowing growth in global oil consumption, leading to rising inventories from Q2 through the end of 2023. The Weekly Private Inventory data meanwhile printed a surprise draw of 2mln bbls (exp. +0.4mln) and the internals were also drawn more than expected. WTI Mar resides around the USD 89/bbl mark (88.61-89.89 intraday range) whilst Brent Apr trades on either side of USD 91/bbl (90.05-91.24 intraday range). The weekly DoE data later is unlikely to dictate the upcoming course of crude prices. Over to metals, spot gold is caged to a right range below Jan-22 resistance around the USD 1,828-30/oz region whilst the downside sees the 21DMA at 1,819/oz – with eyes set on Thursday’s US inflation. LME copper meanwhile has nursed some losses as the overall risk sentiment supports the red metal north of USD 9,750/t.

09 Feb 2022 - 10:55- EnergyResearch Sheet- Source: Newsquawk