EUROPEAN COMMODITIES UPDATE: Crude continues trundling lower alongside base metals while gold moves sideways within recent ranges

Analysis details (10:16)

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  WTI Nov and Brent Dec futures remain on the backfoot following yesterday’s mammoth decline which saw both contracts settle lower by over USD 5/bbl apiece, with the downside yesterday gradual, rather than a function of any specific news, although some desks have been pinning it on “demand fears”, whilst the OPEC+ JMMC opted to maintain all output settings. “The current rates environment and weak gasoline market appear to have been the catalyst,” says ING, with the Dutch bank suggesting the EIA gasoline metrics saw the largest build since January 2022 – “This move has helped to take total US gasoline inventories back above the five-year average for this time of year.” Back to today’s session, the cautious risk tone and firming Dollar keep the oil contracts under pressure, with WTI dipping back under USD 84/bbl (vs high 84.92/bbl) while Brent December slipped under USD 85/bbl for the first time since August (vs high 86.52/bbl). News flow for the energy complex has been abundant this morning, irrespectively of the large misses in German and UK construction PMIs, with the Turkish Energy Minister suggesting the Iraq-Turkey pipeline is operational as of Wednesday and no obstacle to shipping oil to global markets, but when asked in oil flows started on pipeline, said Turkey stands ready to ship incoming oil. Markets are waiting for clarity on the Northern Iraqi oil flows through the Ceyhan pipeline, with Turkey suggesting flows could resume this week, while Iraqi officials poured cold water on the news, clarifying that some issues still need to be resolved. Sticking with energy, nat gas prices are back in focus after Australia's offshore alliance said Chevron reneged on commitment given to FWC to incorporate recommendations into Co's EBA's for Wheatstone and Gorgon facilities. Australian Union Representative said members are likely to vote to resume strikes at Chevron facilities in meetings commencing later tonight. Dutch TTF prices trade around 2% lower under EUR 38/MWh.


• Over to metals, spot gold is flat intraday awaiting tomorrow’s US labour market report, with the yellow metal uneventful within yesterday’s USD 1,815.50-30.39/oz parameters. Base metal futures are mostly lower amid the cautious risk tone and as the Dollar recoups some lost ground, with 3M LME copper extending losses under USD 8,000/t and dipping under USD 7,900/t in recent trade. Sticking with copper, Moody's downgraded its credit ratings for Chilean miner Codelco on Wednesday amid lower production volumes and higher costs, while giving the state-owned copper producer a negative outlook.

05 Oct 2023 - 10:19- MetalsEU Research- Source: Newsquawk