EUROPEAN COMMODITIES UPDATE: Crude consolidates whilst base metals slip and gold trades near DMAs

Analysis details (10:48)

WTI and Brent June futures have been consolidating with modest gains after the front-month contracts settled lower by almost USD 6/bbl apiece yesterday. The global growth slowdown remains the main bearish factor for the crude complex whilst upside risks include further geopolitical escalations – with eyes also on China and Iran. Delving deeper into the former, global GDP slowdown expectations were backed by the IMF forecasts yesterday, whilst China’s COVID situation remains a headwind for demand. On the latter, today sees the Finnish parliament debating a potential swift entry into NATO. Finland shares a large border with Russia and this development provides another gateway for an escalation with the West. WTI and Brent reside just above USD 103/bbl and USD 108/bbl, respectively. Turning to metals, spot gold drifted lower after dipping under its 21 DMA (1,946.45/oz) and headed towards its 50 DMA (1,933/oz) before finding interim support at around 1,938/oz. Base metals are also lower across the board on the LME, potentially on global growth slowdown risks. Desks have previously suggested European car sales could be used as a proxy for some base metal demand; European Passenger Car Registrations fell 12.3% Y/Y in Q1 and -20.5% Y/Y in March. “The ongoing supply chain disruptions, further exacerbated by Russia’s invasion of Ukraine, negatively affected car production. As a result, most countries in the region recorded double-digit drops in sales, including the four key markets: Spain (-30.2%), Italy (-29.7%), France (-19.5%) and Germany (-17.5%),” The European Automobile Manufacturers' Association (ACEA) said.

20 Apr 2022 - 10:48- MetalsResearch Sheet- Source: Newsquawk