EUROPEAN COMMODITIES UPDATE: Crude firms up but is yet to recoup Wednesday’s losses with drivers limited

Analysis details (10:50)

• Crude benchmarks are firmer on the session though the magnitude of the move pales in comparison to the downside seen WTD and since the middle of October when the Israel-Hamas geopolitical premium peaked, so far at least. Metals are modestly softer but with action relatively contained as the USD inches higher and the overall risk tone remains firmer in Europe but much more tentative thus far stateside.


• For crude specifically, fundamental developments have been light and action is essentially consolidation from the over USD 2/bbl lower settlement on Wednesday. The relative recovery was seemingly spurred by the US military confirming that it conducted a self-defence strike on a facility in eastern Syria, in response to attacks on personnel in both Iraq and Syria. Elsewhere, the main geopolitical developments have been reports that Hamas is said to be considering releasing some hostages in exchanged for a brief pause while Axios reports that Biden and Xi and preparing to restart military channels, details light on the latter. As it stands, WTI Dec’23 and Brent Jan’24 are posting upside of just under USD 1/bbl on the session; but, have only been able to recover to around the mid-point of Wednesday’s USD 74.91-77.53/bbl parameters in WTI at best. Elsewhere, UBS believes that oil will move higher and back towards USD 90-100/bbl amid rising global demand and tight supplies, adding that they expected voluntary reductions by Saudi and Russia are likely to be extended in Q1-2024.


• Moving to metals, spot gold is essentially unchanged with a very slight negative bias amid ongoing USD strength. Action which continues very similar APAC performance where the yellow metal failed to sustain modest gains above USD 1950/oz, currently holding around the USD 1943/oz trough. Separately, base metals reside a little bit deeper into the red despite the relatively constructive risk tone as the market seemingly continues to take impetus from the more mixed APAC performance with particular reference to China; as the latest inflation numbers add to concerns over the economy while Hong Kong’s performance was impaired further on property woes.

09 Nov 2023 - 10:46- MetalsGeopolitical- Source: Newsquawk