EUROPEAN COMMODITIES UPDATE: Crude inches higher as Idalia intensifies, XAU awaits USD impetus

Analysis details (10:45)

• Another European morning of gradual upside for the energy complex as we await any potential outages from the rapidly intensifying category four Hurricane Idalia. Elsewhere, updates have been limited re. LNG while spot gold is essentially unchanged and base metals are more mixed after recent Chinese-support-induced gains.


• Currently, WTI Oct’23 and Brent Nov’23 are at the top-end of sub-USD 1/bbl parameters, a peak which printed in proximity to Idalia getting upgraded to a category four hurricane which could potentially strengthen further before reaching the Big Bend, Florida in the next few hours. Thereafter, it should weaken post-landfall but the NHC believes it will still be a hurricane when it crosses southern Georgia.


• NHC aside, the session’s main impetus has stemmed from regional/national European inflation readings. The initial skew of which were hawkish and prompted a corresponding reaction in European-related assets; however, developments since were initially dovish and seemingly sparked some fleeting pressure in the energy benchmarks, though the final skew is now slightly hawkish vs expectations ahead of the mainland German figure.


• Moving to metals, spot gold is unchanged in extremely narrow circa. USD 3/oz bounds as the DXY struggles to meaningfully deviate from the neutral point ahead of a packed afternoon agenda. In contrast, base metals are more mixed and take a breather from recent sessions of stimulus-induced upside. A slight pause in the action occurred despite relatively constructive commentary from US Commerce Secretary Raimondo on her meeting with Chinese officials and after reports that the PBoC is meeting with private firms to bolster their financing.


• For aluminium, the FT citing trades/analysts writes that the slump in prices this year may be nearing the trough, writing that producers and traders are turning increasingly bullish in the medium-term given EV and renewable related demand.

30 Aug 2023 - 10:40- Research Sheet- Source: Newsquawk