EUROPEAN COMMODITIES UPDATE: Crude clambers further off weekly lows while gold bides time ahead of NFP

Analysis details (10:05)

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  WTI and Brent front-month futures are firmer intraday following the week of hefty losses for the complex emanating from a concoction of growth concerns and US banking-sector woes, with WTI June clocking a weekly range of USD 63.64-76.69/bbl while Brent July sees a weekly band of USD 71.28-80.24/bbl. “Sentiment clearly remains negative, which suggests that there could be some further downside in the near term, although, we would expect the market to find good support near the March lows of around USD 70/bbl”, posits the analysts at ING. Desks also flag that the crude market is currently in oversold territory, whilst a deficit over the second half of the year could support oil prices. Elsewhere, OPEC+ yesterday confirmed that the next confab will occur between June 3rd-4th – in fitting with prior reports, although some analysts suggest that if the weakness in the crude market persists, then the group will be forced to roll back production further. On the geopolitics front, the Russian Security Council will be meeting later today and is highly likely to discuss the drone incident. Russia's Foreign Minister Lavrov reiterated earlier in the session that Russia will not say if the drone attack on the Kremlin is a case for war, but we will respond. On Wednesday, Russia's Kremlin announced that two drones had been used in the attack, but that they had been disabled by Russian defences. It has vowed to take retaliatory measures. Yesterday, Kremlin said "We know decisions about such terrorist acts are taking in Washington and not Kyiv", and claimed Washington is definitely behind the attack, and Kremlin is well aware of this. Ahead, the US labour market report will likely take centre stage.


• Spot gold is flat in a USD 2,038-53/oz range intraday range in what has been a week of sizeable gains for the yellow metal, with some charts printing an all-time high just above USD 2,080/oz from an ~ USD 1,977/oz weekly low. Spot gold has been boosted by fears surrounding the US banking sector, alongside lingering growth concerns. The World Gold Council’s quarterly report suggested central banks continued to purchase gold in Q1 2023, with a record 228 tonnes purchased. FT cites the chief market strategist at the World Gold Council saying “Whether gold could push higher would depend on whether investors saw signs of a worsening banking crisis, certainty over when the US Federal Reserve would start cutting rates and a weaker dollar.” Elsewhere, base metals are now mostly lower after trimming earlier gains as the Dollar clambered off worst levels, although price action is contained ahead of the NFP – 3M LME copper trades on either side of USD 8,500/t, within recent ranges.

05 May 2023 - 10:04- MetalsEU Research- Source: Newswires