EUROPEAN COMMODITIES UPDATE: Crude consolidates while metals feel some reprieve amid a subdued Dollar

Analysis details (09:48)

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  WTI and Brent June futures eke mild intraday gains as prices consolidate following yesterday’s losses, which saw the former settle lower by USD 2.77/bbl and the latter by over USD 3/bbl yesterday. Crude settled around lows on potential Iraq/Turkey supply progress, increased Russian refinery runs, and FRC woes, while desks also cited possible recessionary fears outweighing the large US EIA inventory draw. Crude prices have closed the gap made by the voluntary OPEC+ cuts this year. On that note, Russian Deputy PM Novak this morning said OPEC+ sees no need for further output reductions despite lower-than-expected Chinese demand. He added Russia to redirect 140mln tonnes of oil and products meant for Europe to Asia in 2023, and Russia achieved the necessary oil output cut level in April. As a reminder, next month does not see a JMMC meeting, whilst an OPEC+ Ministerial meeting is slated for June. Crude prices this morning have been moving sideways since settlement, with WTI on either side of USD 74.50/bbl and Brent oscillating around USD 78/bbl. “The price action we have seen in the last two weeks would suggest that OPEC+ made the right decision to announce further supply cuts. However, our balance sees significant tightening over the second half of the year, which should still mean that the market moves higher. For now, though, it’s a bit tricky to figure out where the floor for the market is”, say the analysts at ING, whilst adding “Clearly sentiment in the market remains negative as a result of the macro outlook.”


• Over to metals, spot gold sees modest gains and largely mirrors Dollar action, but the yellow metal remains underpinned by banking woes emanating from First Republic Bank in the US. Spot gold prints on either side of USD 2,000/oz within a USD 1,987.81-2,003.13/oz range. Base metals are mixed amid the overall cautious tone and a lack of catalysts in the European morning. 3M LME copper briefly dipped under USD 8,500/t to a USD 8,456/t trough before reclaiming the psychological level.

27 Apr 2023 - 09:50- MetalsEU Research- Source: Newsquawk