EUROPEAN COMMODITIES UPDATE: Crude edges higher, gold wanes, and base metals see mixed trade as eyes turn to US data

Analysis details (09:58)

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  WTI and Brent March futures have been drifting higher since the European cash equity open, with the former back above USD 82/bbl (vs low USD 81.08/bbl) and the latter north of USD 88.50/bbl (vs low USD 87.55/bbl). There has been little in terms of news flow to attribute to the price action, but fundamentals remain bullish for the complex amid China’s abandonment of the zero-COVID policy, whilst Chinese markets are set to return this weekend from their week-long Lunar New Year. Over in Europe, the EU proposed a price cap on Russian premium oil products of USD 100/bbl and USD 45/bbl on discounted oil products, while EU governments are to discuss the proposals today before entry into force on February 5th. US Treasury Secretary Yellen says the US is in the middle of talks with the EU on the Russian price cap. Looking ahead, traders will be mindful of the OPEC+ JMMC meeting on February 1st. This will not be a decision-making meeting – with the next OPEC+ Ministerial Meeting currently slated for 4th June 2023. Sources via Bloomberg and Reuters suggest the JMMC committee of ministers is to recommend keeping oil production levels unchanged, citing a tentative recovery in global demand. The recovery optimism arises from a combination of mounting calls for less-severe-than-expected recessions/GDP slowdowns, coupled with China ditching its zero-COVID policy and reopening its markets. Despite OPEC+ dropping its format of monthly decision-making meetings, the Saudi Energy Minister emphasises that OPEC+ will remain “proactive and pre-emptive” to keep oil markets balanced. Overnight, the OPEC President said the group needs to be careful on quota decisions, according to Bloomberg.


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  Gas markets are softer with CME Nat Gas pressured as the Federal Energy Regulatory Commission (FERC) approved Freeport LNG's request to begin the restart process at its Texas LNG plant. Dutch TTF futures are hampered as the temperature in Europe is expected to rise again next week, while gas storage levels remain at the top of the 10-year range for January.


• Over to metals, spot gold is modestly softer intraday ahead of US PCE and as the Dollar remains firm, with the yellow metal printing an intraday low of around USD 1,920/oz vs yesterday’s USD 1,918.50/oz trough. Base metals are mixed but copper prices hold onto recent gains above the 9,300/t mark and near recent highs, buoyed by demand prospects from China alongside the Peruvian social unrest.

27 Jan 2023 - 10:00- Research Sheet- Source: Newsquawk