EUROPEAN COMMODITIES UPDATE: Crude consolidates after Tuesday’s marked gains, base metals off-lows

Analysis details (10:20)

• A session of consolidation for crude after Tuesday’s Russia and Saudi induced gains. Gas markets are attentive to the commencement of Australian LNG strikes on Thursday. While metals feature near unchanged performance for spot gold, base metals are softer but in a similar fashion to Chinese bourses have lifted off lows.


• WTI Oct’23 and Brent Nov’23 are lower by around USD 0.70/bbl having slipped through and tested the USD 86.00/bbl and USD 89.00/bbl figures respectively. Action which comes in relatively light specific newsflow and as such is seemingly a consolidation of the prior sessions pronounced strength following Saudi and Russia committing to the voluntary production cut for three more months (exp. one). For reference, the benchmarks settled higher by just over USD 1.00/bbl at USD 86.69/bbl and USD 90.04/bbl respectively. Response to the longer-than-expected commitment has been limited thus far, but we have seen the US DoE announce that 2.9mln barrels was added to the SPR in August, the largest increase in over three years; additionally, Congress has announced it will be selling off 1mln barrels of gasoline reserves from post-Hurricane Sandy, given questions over its use. While these updates are not direct responses to the Saudi/Russia update and associated price upside, they may have added to the crude pullback seen this morning.


• For the session ahead, the docket features the delayed Private inventory data given Monday’s US holiday. Expectations are for a headline crude draw of 1.4mln, while the internals are seen mixed but are not forecast to differ substantial from the unchanged mark after last week’s pronounced moves.


• Gas markets are slightly softer, Dutch TTF -2.0%, but the general tone has been one of anticipation ahead of the pre-announced commencement of industrial action for one week from September 7th at Chevron’s Australian sites. Additionally, notice for another week of action has already been filed which will commence if negotiators and the Co. do not come to an agreement by September 14th.


• Spot gold is essentially unchanged, despite a softer USD and with the broader risk tone erring to the downside. As it stands, the yellow metal is contained and awaiting further impulses from key US data and numerous speakers later in the session. Elsewhere, base metals remain in the red but have lifted off of APAC lows in-line with the region’s equity market as Premier Li reaffirms that they are on target for the circa. 5% growth target. Additionally, impetus is perhaps stemming from the first meeting of Hong Kong’s Financial Task Force; though, we are yet to see any pertinent commentary from this gathering.

06 Sep 2023 - 10:12- Research Sheet- Source: Newsquawk