EUROPEAN COMMODITIES UPDATE: Crude climbs as geopols flare up, XAU unreactive

Analysis details (10:05)

• A flare up in geopolitical tensions has sparked a concerned bid for the crude benchmarks after relatively contained action across the last few sessions. Though, given the magnitude of recent gains, spot gold has been relatively unreactive thus far with the firmer USD and pre-US data trade perhaps a factor. Elsewhere, base metals are moving in-line with the generally constructive risk tone post-AMZN and INTC earnings.


• As it stands, WTI Dec'23 and Brent Jan'24 are at the top-end of circa. 1.50/bbl parameters that have seen the contracts eclipse USD 85.00/bbl and test USD 89.00/bbl respectively at best. Action which has been driven by an increase in geopolitical rhetoric. Namely, reports overnight that a rocket fell in Taba, Egypt and since that a projectile landed in Nuweiba, Egypt. Reports which have limited details behind them thus far but have prompted Israel to say it will, alongwith the US and Egypt, be working to bolster defenses around the Red Sea. Additionally, the IDF announced that warplanes have been called to deal with a threat in the Red Sea region; details on this are very light currently. More broadly, markets await any potential response from Iran after US President Biden ordered strikes against two Syrian facilities that were being used by the IRGC.


• Moving to metals, as mentioned the above geopolitical escalations has not had much follow through to XAU just yet which remains in narrow ranges around the USD 1985/oz mark after testing but failing to eclipse the USD 2k/T figure on Thursday. Elsewhere, base metals are firmer and feature LME Copper back above USD 8k/T. A move what is seemingly a function of broader risk appetite beginning to return to the market and driven predominantly by Amazon's stellar Q3 earnings report and the associated broad equity bid thereafter. However, it is worth caveating that today's docket features Tier 1 US data in the form of the Fed's preferred inflation gauge.

27 Oct 2023 - 10:00- MetalsEU Research- Source: Newsquawk