EUROPEAN COMMODITIES UPDATE: Crude continues its upward grind while metals hold fire ahead of risk events

Analysis details (09:35)

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  WTI Oct and Brent Nov futures remain firm in early European trade with sentiment underpinned by this week’s trio of oil market reports which all ultimately flagged a tighter market in Q4. Overnight, the constructive APAC mood and softer Buck kept prices on a gradual upward grind after the contracts settled marginally lower yesterday following this week’s bearish inventory data. News flow has been light for the complex this morning as participants gear up for this afternoon’s key risk events, including the ECB announcement and presser (full preview in the Newsquawk Research Suite), US retail sales and IJC, whilst some short-term influence could arise from sentiment surrounding the Arm IPO on the Nasdaq at the US cash open. From a political standpoint, analysts at ING recently flagged the repercussions of higher oil prices in recent days, with the Dutch bank suggesting “it appears as though the US Department of Energy has already been in touch with domestic oil producers and refiners with regard to inventories and the supply outlook. We are likely to hear only more noise around this matter, particularly after a strong CPI print yesterday.” Over in the Middle East, reports yesterday citing Kuwait’s KPC suggested KPC sees USD 80-90/bbl as a “fair price”, and “oil prices in the USD 50-60/bbl range are neither feasible nor realistic.”. Looking ahead, though, despite signs pointing to further tighter balances in the fourth quarter, KPC said it did not expect oil prices to rise much beyond current levels. WTI has regained a footing above USD 89/bbl (vs low 88.68/bbl), while Brent is back above USD 92.50/bbl (vs low 92.02/bbl).


• Over to nat gas, Dutch TTF is currently modestly softer intraday after rallying some 6% yesterday. Desks cite another extension to the Norwegian Troll field maintenance. Furthermore, Chevron’s Australian LNG operations are under threat of an escalation in strikes, with an Australian union official suggesting significant escalation in industrial action at Chevron's Australian LNG facilities and a decision on whether to strike for the full 24 hours is being taken on a case-by-case basis across the 3 facilities involved. Add to that, Chevron reported a fault which has impacted 25% of LNG production at Australia's Wheatstone plant, according to a spokesperson – the cause has been identified and restart activities have commenced, and the domestic gas facility is unaffected.


• In terms of metals, spot gold treads water just above USD 1,900/oz but around yesterday lows, with price action contained ahead of upcoming risk events, with the next notable level to the downside under 1,900/oz being the August low at USD 1,884.89/oz – “In this high rate environment, investors continue to shun gold, with ETF holdings set for their sixteenth consecutive week of outflows”, say ING. Base metals are mixed/mostly firmer following the constructive tone from the APAC region and the softer Dollar, although price action is contained by the looming risk events – 3M LME copper remains within yesterday’s parameters under USD 8,500/t.

14 Sep 2023 - 09:35- EnergyEU Research- Source: Newsquawk