EUROPEAN COMMODITIES UPDATE: Crude consolidates post-OPEC and pre-JCPOA, gold marches higher and base metals trade mixed

Analysis details (10:53)

WTI and Brent futures have been consolidating from their post-OPEC rise and fall. To recap, the group agreed to hike total production by 100k BPD, split among most members, with Saudi’s share being increased by 30k BPD and the UAE’s by 7k BPD. Ahead of the meeting, sources were guiding for an increase of “under 500k BPD” to 100k BPD, thus at the lower end of guidance. The decision is likely to please the US and ease some pressure from Washington in the short term at least, with US Energy Department's Hochstein stating the US has seen a remarkable decline in oil prices and wants to see even lower prices. However, the question remains over real output - with OPEC over-compliance at over 300% and non-OPEC at over 400%, according to Energy Intel. Furthermore, this morning saw the release of the Saudi Aramco September OSPs, with the Arab Light premium vs Oman/Dubai at USD 9.80/bbl, towards the bottom end of the touted USD 9.80-11.10/bbl, according to Reuters sources. Elsewhere, Iranian nuclear talks have resumed, but the chance of an imminent breakthrough again seems slim as Tehran maintains its stance, with focus on any shift in Washington’s stance. Aside from that, eyes remain on the geopolitical space, recession commentary and market impulses from central bank activity. Global shipping is to be watched amid the China drills in the vicinity of Taiwan – yesterday SCMP reported that global shipping lines postpone sailings and plan detours around Taiwan amid China drills with gas suppliers re-routing or reducing speed on some LNG vessels amid China drills, with shipments to Taiwan and Japan this weekend will be affected. Elsewhere, European nat gas and power prices have been on the rise once again amid concerns emanating from Russia. Over to metals, spot gold has been on the rise after topping yesterday’s high, with the 50 DMA today seen at USD 1,789.90/oz. Finally, base metals are mixed with LME copper a touch softer intraday around USD 7,650/t, with the red metal eyeing developments in East Asia alongside the broader market sentiment.

04 Aug 2022 - 10:52- Research Sheet- Source: Newsquawk