EUROPEAN COMMODITIES UPDATE: Crude edges higher ahead of OPEC+ meeting whilst metals are tentative awaiting US PCE

Analysis details (09:59)

• WTI and Brent are building on yesterday’s gains, ahead of the OPEC+ Meeting scheduled to take place at 14:30 GMT. WSJ sources yesterday suggested a rollover of most existing output curbs is the most likely scenario but talks are continuing, but OPEC+ reportedly mulls new oil production cuts amid the Middle East conflict with Saudi Arabia favouring a curb of up to 1mln BPD. Compliance among members is expected to be stressed and production baselines may be lowered to tighten compliance. Nigeria and Angola resisting a downgrade of their individual quotas and the UAE is also reluctant to cut output, according to WSJ. The meeting is part of routine confabs to evaluate market fundamentals. Saudi Arabia and Russia have suggested voluntary cut decisions will be reviewed monthly where they will consider deepening the reduction or increasing supply. Subsequent Reuters sources today confirmed that OPEC+ continues to discuss additional oil output cut for early-2024, which ranges from 1-2mln BPD. This sparked an immediate reaction which saw Brent Feb’24 jump from USD 82.97/bbl to 83.44bbl, which then continued to make a high just shy of the USD 84.00/bbl level. Currently, price action has stabilised above the USD 83.00/bbl, as markets await further catalysts from the OPEC+ meeting. In terms of the schedule, the OPEC meeting is expected to take place at 10:00 GMT / 05:00 EST, JMMC Meeting at 13:30 GMT / 08:30 EST and finally the OPEC+ meeting at 14:30 GMT / 11:30 EST. In other news, Kazakhstan Energy Ministry said oil output was down 34% at Karachaganak oilfield on November 29th due to the Black Sea storm.


• It has been yet another busy day on the geopolitics front, where the Israeli military said the truce will continue in light of mediators' efforts to release more hostages and Hamas also confirmed that it agreed to extend the truce for a seventh day, according to Reuters. However, since then, there have been reports that sirens were sounded in Northern Israel after a march crept in from Southern Lebanon, according to Al Arabiya.


• Over to metals, Spot Gold is marginally weaker at USD 2,040/oz, largely attributed to the recent strength in the Dollar. Overall, the precious metal has traded within a tight range (H: 2047/oz, L: 2039/oz), as it awaits impetus from the US PCE data, later today. Taking a look at LME Copper, +0.21%, the metal is on course to post its first monthly gain, going back to July. Price action seemingly ignored disappointing Chinese Manufacturing data, 49.4 (exp. 49.7), which perhaps fuelled optimism of further policy support measures. Further for copper, First Quantum (FM CA) announced the suspension of 7,000 contract employees due to force majeure at its Panama mine. ANZ notes that "this dashed hopes by the company that it might be able to reach a new deal to keep it operating". Dalian iron ore is also modestly firmer, attempting to pare back a five-day stint in the red; with desks attributing optimism over Beijing’s efforts to bolster the property sector. The wider base metals market initially traded mixed overnight post-Chinese data, though are now mainly in the red, led lower by strength in the Dollar.

30 Nov 2023 - 09:59- MetalsEU Research- Source: Newsquawk