EUROPEAN COMMODITIES UPDATE: Crude consolidates and gold posts mild gains; but nickel continues to soar on Russia

Analysis details (11:08)

WTI and Brent front-month futures are firmer intraday, but in the grander scheme the prices consolidate around yesterday’s lows, after positive (or less negative) geopolitical noises from Iran and Russia/Ukraine yesterday pressured the complex. Further, some players may be taking some chips off the table following this week’s impressive advances in prices in the run-up to the US labour market report and potential weekend risks. Nonetheless, Brent May meanders around USD 112/bbl (vs weekly low of around USD 97/bbl) while WTI Apr sits near USD 110/bbl from a weekly base at USD 91.90/bbl. The Russia-Ukraine crisis remains the driving factor behind the rise in commodity prices – with the Bloomberg Commodity Index (BCOM) is also poised for its biggest weekly gain in almost 50 years. For context, Russia holds over 30% market share in Europe for both natural gas and oil, alongside a large market share of total exports in nickel (~49%), palladium (~42%), aluminium (~26%), and platinum (~13%), whilst it also exports steel (~7%) and copper (~4%). Recent reports noted that the Irish Foreign Minister suspects the EU will be banning other imports, such as steel, timber, aluminium and perhaps coal relating to Russia. As a reminder, Western (namely European) officials are hesitant to target Russian energy due to its large integration into the European economy. Meanwhile, SGH Macro notes that Chinese companies will be told to give priority to purchasing Russian products, which are “basically the same in quality and price” as those from Western countries. Note, yesterday, Sputnik reported that the Indian government has begun exploring various ways it can help its exporters continue trading with sanctions-hit Russia. Turning to base metals, China's Industry Ministry (MIIT) summoned rare earth groups regarding the high prices of rare earths. The meeting is regarding fighting speculations and hoarding, with the MIIT also poised to ask companies to guide prices to reasonable ranges. In terms of today’s trade, spot gold has been drifting higher in recent trade towards USD 1,950/oz – but the upside is somewhat capped heading into the US jobs report. Finally, LME nickel prices are again soaring, +9% at the time of writing, just under USD 30k/t.

04 Mar 2022 - 11:07- EnergyResearch Sheet- Source: Newsquawk