EUROPEAN COMMODITIES UPDATE: Crude fades APAC gains and base metals rattled on the cautious market mood

Analysis details (09:38)

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  WTI and Brent March contracts are softer, with the complex fading the initial gains seen at the resumption of futures trading. The upside seen at the open was partly attributed to China re-entering the market following its week-long Lunar New Year Holiday, with China’s National Health Commission also suggesting “The epidemic in China has significantly subsided, and coronavirus prevention & control work during the Spring Festival holidays was stable and orderly”, according to Global Times. Over the weekend, Iran-related geopolitical headlines were also abundant - an explosion was reported at a military plant in Isfahan, central Iran which Iranian officials said was due to an unsuccessful drone attack, while a US official later commented that Israel appeared to be behind the attack, according to Reuters. Elsewhere, US Secretary of State Blinken said all options are on the table to prevent Iran from acquiring a nuclear weapon and said that Iran has rejected the current proposal to return to the nuclear agreement, according to Al Arabiya. Furthermore, the EU is to consider listing Iran’s Revolutionary Guards as terrorists, according to FT, whilst Twitter sources noted unverified reports of airstrikes on the Iraq-Syria border that were carried out against a "meeting of Iranian commanders”. The complex later faded gains as the risk environment started to deteriorate as major G10 central banks – including the Federal Reserve, ECB, and BoE – are set to hike rates further this week. On the OPEC+ front, the JMMC meets on February 1st but sources thus far have suggested the monitoring group will recommend maintaining the current output policy. WTI resides under USD 80/bbl after falling from a USD 80.49/bbl high to a USD 78.73/bbl intraday low, while Brent resides around USD 86.50/bbl in a USD 85.74-87.48/bbl daily parameter at the time of writing.


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  Gas markets meanwhile see a divergence, with Dutch TTF retracing some recent losses while US CME Henry Hub Natural Gas futures are down 6% at the time of writing in an extension of the moves seen last week on the back of milder-than-expected weather stateside.


• In terms of metals, spot gold trundled towards the bottom end of its intraday range as DXY picked up in pace in early European hours before being knocked off course by a firmer EUR post-Spanish CPIs. As such, the yellow metal found an interim floor of around USD 1,920.70/oz. Base metals are mostly lower amid the cautious risk tone, with 3M LME copper back under USD 9,300/t and dipping briefly dipping under USD 9,200/t in early European hours. The Chilean copper commission Cochilco recently said it expects copper supply to grow by 5% this year and 4% in 2024 vs demand increases of 2.3% and 2.9% respectively – Chile accounts for over 25% of global copper supply.

30 Jan 2023 - 09:40- Research Sheet- Source: Newsquawk