EUROPEAN COMMODITIES UPDATE: Crude continues gaining amid favourable supply/demand dynamics, while metals bide time ahead of US CPI

Analysis details (10:10)

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  WTI Oct and Brent Nov futures are modestly firmer following the rally seen yesterday, which resulted in the contracts settling higher by around USD 1.50/bbl apiece, with the latter settling above USD 92/bbl at the highest level since November 2022. Desks cited a bullishly received monthly oil market report from OPEC, which flagged tight supply and also sounded rosier about China’s demand, although the release maintained its 2023 and 2024 global oil demand forecasts. Furthermore, the EIA’s STEO slightly upgraded its 2023 by 50k BPD and now sees a 1.81mln BPD Y/Y increase, while it cut 2024 world oil demand growth by 250k BPD to a 1.36mln BPD Y/Y increase. The EIA also upgraded its Brent oil price forecast to average USD 93/bbl during Q4 (vs. prev. USD 86/bbl in the August report), “A decline in global oil inventories in the coming months supports the Brent price in our forecast. The price eases to an average of USD 87/bbl by the second half of 2024 because we expect global oil inventories to rise during that period”, the release said. 


• Turning to the US SPR, analysts at ING suggest “It may be difficult for the US government to allow further releases from its strategic petroleum reserves (SPR), but we are likely to see the government taking a pause in refilling the SPR after the large releases seen last year.” Meanwhile, on the flip side, the weekly Private Inventory data proved to be bearish, with builds seen in headline crude stocks. The morning also saw the release of the IEA’s monthly report which maintained its 2023 and 2024 global oil demand growth forecast steady but warned the extension of oil-output cuts by Saudi and Russia will lock in a substantial market deficit through Q4 2023, although some OPEC+ cuts tempered by sharply higher Iranian oil flows. WTI reached a high of USD 89.64/bbl at the time of writing (vs. low 88.73/bbl) while Brent rose to a 92.84/bbl current high (vs. low 91.99/bbl).


• Over to metals, spot gold is subdued amid the firmer Dollar, but the yellow metal’s prices remain north of USD 1,900/oz and in a tight range in the run-up to the US CPI report, with the 21 DMA to the upside at USD 1,916.44/oz while downside levels include yesterday’s low of USD 1,907.62/oz. Base metals meanwhile now trade relatively mixed and with the breadth of the market narrow as markets await the US CPI data – 3M LME copper is back towards the session highs above USD 8,400/t after finding a floor near USD 8,350/t overnight.

13 Sep 2023 - 10:10- MetalsData- Source: Newsquawk