EUROPEAN COMMODITIES UPDATE: Crude consolidates near weekly-highs but gold looks heavy pre-US data

Analysis details (10:47)

WTI and Brent front month futures are consolidating following yesterday’s choppy price action with WTI on either side of USD 87/bbl (vs low USD 86.70/bbl) and Brent on both sides of 90.00/bbl (vs low USD 89.41/bbl) - but towards the top end of the weekly ranges. Yesterday, February natgas expired 46% higher at USD 6.265 for the biggest daily increase on record and the March contract settled 6% higher at USD 4.28, with extreme volatility in the Feb. contract going into the settlement to post an intraday high of over 70% before reversing to 40%, although given the contract expired there was not much volume or open interest. In terms of the macro landscape, markets continue to keep an eye on geopolitics with the war of words tense as Russia sifts through the US and NATO proposals before deciding its stance. Russia is also poised to speak to the French and German leaders today as the Euro-leaders remain concerned about the potential impact on the European energy sector of US sanctions on Russia. As a reminder, Russia holds over 30% market share in Europe for both natural gas and oil. Qatar will meet with President Biden on Monday to discuss the potential alleviation of supply pressures in the event of Russian sanctions. On that note, metals traders should also remain vigilant as Russia holds 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%). A supply disruption will naturally lead to higher prices. Meanwhile, the morning saw commentary from the Iranian side suggesting the progress on the Nuclear Deal has been positive – although details remain light. Back to metals, spot gold continues to feel heavy as prices trundle lower after the yellow metal failed to remain above its 100 DMA (1,795/oz). Over in the base metals, complex, LME copper is extending on losses as the risk profile across the markets deteriorate, with prices looking back at USD 9,500/t to the downside.

28 Jan 2022 - 10:45- MetalsGeopolitical- Source: Newsquawk