EUROPEAN COMMODITIES UPDATE: Crude clipped amid COVID measures and JCPOA progress, OPEC+ looms

Analysis details (10:40)

WTI and Brent have commenced the last week of March on the back-foot, as updates re. COVID and the JCPOA offset potential upside from geopolitical premia. Currently, the benchmarks are in proximity to session lows of USD 108.28/bbl and USD 115.32/bbl respectively; but, remain well within the parameters of last week. In terms of the bearish drivers, we have a hit to demand from the instigation of fresh COVID measures in China as Shanghai announces a four-day lockdown. Additionally, progress on the JCPOA, as Iran believes that France, Germany and the UK agree on the text and the US accepts it must address some remaining issues. Elsewhere, Saudi Arabia has begun neutralising those targeting its oil facilities, seemingly serving to reduce a known and frequent supply-side catalyst. However, the other side of the coin of course has the Ukraine-Russia war and the Kremlin suggesting, in contrast to earlier reports, that face-to-face talks will not commence on Monday, but may instead begin on Tuesday. Additionally, Ukraine has not opened any humanitarian corridors amid intelligence of possible provocations; on this, a Ukraine-based war reporter cites reports suggesting that Russia is attacking to the east and northwest of Kyiv, trying to take key roads and settlements. A development which seemingly contrasts with their updated strategy to focus on eastern-regions. OPEC+ is due to meet on Thursday and we have seen substantial commentary from energy officials already; ADNOC CEO says they are seeing in the near-term markets tighten with demand over the past year up almost 3mln/BPD and UAE’s Energy Minister acknowledging that everyone is saying to increase production. However, remarking that financial institutions are hesitant to finance many projects globally. Overall, the group is still expected to hike production quotas by the planned 400k BPD/month figure. Moving to metals, spot gold and silver are hampered this morning taking direction from broader risk sentiment and the substantial pullback in other havens such as JPY and core-debt. LME Nickel is hampered once more but, thus far, has managed to avoid a decline to the 15% daily limit.

28 Mar 2022 - 10:39- MetalsGeopolitical- Source: Newsquawk