EUROPEAN COMMODITIES UPDATE: Crude clipped as participants await clarity on reported Donbas shelling

Analysis details (10:15)

WTI and Brent are pressured this morning by between USD 1.50-2.00/bbl, but remain within extensive APAC ranges amid multiple pertinent geopolitical updates. Currently, we are awaiting clarity on whether shelling took place within the Donbas region of eastern-Ukraine. To recap, overnight we saw reports via Sputnik that Ukraine’s armed forces fired mortar shells/grenades on LPR localities, updates that were corroborated by Russian-backed rebels in eastern-Ukraine – the initial Sputnik report prompted notable upside in the benchmarks, taking them to the current session highs of USD 93.31/bbl and USD 94.48/bbl respectively. However, Ukraine has denied shelling separatists’ positions within eastern-Ukraine; furthermore, Ukraine military is claiming, via Reuters, that Russian occupying forces fired on a village in the Luhansk area of Donbass – participants are keeping a close eye on such reports in the context of Western govt’s recently warning of the potential for a ‘false flag’ attack by Russia as a pretext for further action. On the matter of action, EU Officials are to discuss Russian sanctions today as part of an updated agenda to an EU-Africa summit, commencing from circa. 16:00GMT/11:00EST; Newsquawk analysis available here. Amidst these developments, there has been further reporting that Russia is pulling back equipment/troops from the region as drills are concluding, with the Foreign Minister Lavrov confirming that Belarus drills are to end on February 20th. Though, we are awaiting confirmation of this from a non-Russian outlet/source, particularly after Wednesday’s remarks from US Officials that Russian troop presence has in-fact increased in recent days. In terms of price action, the benchmarks are yet to move towards a test of overnight lows at USD 90.62/bbl and USD 91.57/bbl for WTI and Brent respectively. Technically, technicians look to support at USD 91.11/bbl and then USD 90.07 before the handle itself in Brent. Moving to metals where action has seen similarly extensive ranges overnight amid movements in risk sentiment on the aforementioned updates. Action that lifted spot gold well above the USD 1850/oz region it has recently been holding on to a session high just shy of USD 1900/oz. A breach of this mark would bring resistance at USD 1919.20/oz and USD 1930.30/oz into play. Finally, iron ore continues to draw focus amid further China intervention with the State Planner asking some traders to help verify if there is hoarding or other irregularities; asked some iron ore traders to release high inventories to decent level; will set up market supervision.

17 Feb 2022 - 10:15- MetalsGeopolitical- Source: Newsquawk