EUROPEAN COMMODITIES UPDATE: Crude climbs on private inventories despite disappointing data

Analysis details (10:35)

• Commodities began the session relatively contained but with a slightly softer bias as the disappointing Chinese trade data prompted a pull-back from the private inventory induced bid in crude. Since then, newsflow has been relatively quiet and the crude complex has managed to bring itself back onto a firmer footing and towards the overnight inventory peaks of USD 71.94/bbl and USD 76.50/bbl for WTI Jul’23 and Aug Jul’23 respectively. For reference, today’s EIA release is expected to post a headline build of 1.022M in contrast to the surprise private draw of 1.7mln.


• The return to positive this morning is modest at best and as above has occurred in limited newsflow and as such is perhaps a function of the USD’s pullback from best levels with the index now slightly softer; though, again, overall action is relatively contained. Updates this morning included commentary from IEA’s Head Birol, though the official added little on business TV and was largely talking around expected supply/demand dynamics on OPEC+ action and looks for a tight H2 for the market.


• On the geopolitical side developments are focussed on the Zaporizhzhia nuclear plant situation after the Kakhovka dam burst, with the IAEA set to send additional staff there to provide assistance while the US said current intelligence indicates Russian was behind the dam attack.


• Moving to metals, base metals are modestly firmer despite negative demand signals from the Chinese Trade data and German Industrial Output, in a rebound from the somewhat indecisive action in copper given the APAC release. The initially limited and ultimately firmer price action following Chinese trade is perhaps due to analysts suggesting the import data indicates that the overall reopening recovery remains on track, given the figure lifted to a 18-month high. The likes of CapEco write that the import recovery is likely to continue in upcoming quarters, as the economy continues to reopen.


• Finally, spot gold is essentially unchanged given the USD has pulled back to being essentially flat and while the overall tone is a touch negative, we remain relatively rangebound at this point. Currently, the yellow metal holds around USD 1963/oz in USD 1955-66/oz parameters with the lower-boundary aligning with the 10-DMA.

07 Jun 2023 - 10:40- MetalsData- Source: Newsquawk