EUROPEAN COMMODITIES UPDATE: Crude inches higher as trade deals loom, LME copper slips

Crude Oil: WTI Aug +0.7%,Brent Sep +0.7%

• Upward bias across the crude contracts with Brent front-month settling north of USD 70/bbl yesterday following the OPEC+ surprise over the weekend, in the form of a larger-than-expected supply increase for August.


• Desks suggest the Houthi attacks in the Red Sea have seemingly supported prices.


• Furthermore, on the Russia-Ukraine front, Russia launched a "record" 728 drones overnight and 13 missiles, according to Ukraine's Air Force.


• On the tariff front, the White House announced that President Trump signed an executive order extending the tariff deadline to August 1st, whilst an official also clarified that tariffs will not stack - possibly providing some relief to crude prices. US President Trump posted that they "will be releasing a minimum of 7 Countries having to do with trade" on Wednesday morning, and with an additional number of countries to be released in the afternoon.


• The Private Inventory report overnight was net bearish [Crude +7.1mln (exp. -2.1mln), Distillate -0.8mln (exp. -0.3mln), Gasoline -2.2mln (exp. -1.5mln), Cushing +0.1mln], traders are on the lookout for confirmation via the weekly DoEs later today.


• Elsewhere, EIA STEO stated 2025 world oil demand is seen at 103.5mln BPD (prev. 103.5mln BPD) and 2026 world oil demand at 104.6mln BPD (prev. 104.6mln BPD). Note that the OPEC 2050 outlook will be released tomorrow. The IEA OMR is due this Friday, with the OPEC MOMR due next week.


• Analysts at ING suggest "the market remains tight in the near term, as reflected in the timespreads. This will likely persist through the northern hemisphere summer, when we see seasonally stronger demand. The oil market only starts to loosen from the fourth quarter, when we expect to see more sustainable downward pressure on prices.".


• WTI resides in a USD 67.78-68.94/bbl range while its Brent counterpart trades in a USD 69.85-70.71/bbl range.

Precious Metals: Gold -0.4%, Silver -0.8%, Palladium -3.1%

• Softer trade across precious metals despite a relatively stable Dollar.


• Weakness in the complex could be a function of optimism regarding trade deals, after the White House announced that President Trump signed an executive order extending the tariff deadline to August 1st, whilst an official also clarified that tariffs will not stack. Possibly providing some relief. US President Trump posted that they "will be releasing a minimum of 7 Countries having to do with trade" on Wednesday morning, and with an additional number of countries to be released in the afternoon.


• Aside from that, newsflow has been light with participants also gearing up for FOMC Minutes later today.


• Spot gold continues yesterday's weakness and resides in a USD 3,282.66-3,308.15/oz range, with the next point the 30th June trough at USD 3,244.42/oz.

Base Metals: 3M LME Copper -2.0%

• Overall softer trade across base metals despite commentary from US President Trump yesterday, in which he believes the copper tariff will be 50%, lifting the US benchmark by over 10% to a record high. Desks suggest markets expected a 25% copper tariff.


• US Commerce Secretary Lutnick also suggested copper tariffs are likely to be in place by the end of July.


• Trump’s Section 232 investigation into copper imports, initiated in February, has prompted heavy buying and a surge in US copper prices as traders rush to bring in metal ahead of a likely 50% tariff. This front-running, according to ING, has widened the Comex-LME arbitrage to over USD 2,000/t and pushed Comex inventories above combined LME and SHFE levels.


• While this supports US prices in the near term, desks suggest that once tariffs are implemented, demand is expected to drop and US buyers will work through their stockpiles, easing global supply and weighing on LME prices.


• Goldman Sachs maintains its December 2025 LME Copper price forecast at USD 9.7k. Changes the baseline view on US tariffs on copper imports to 50% (prev. exp. 25%). Expect a further acceleration in copper shipments into the US in the weeks ahead, as the incentive to front-run tariffs has now increased. See a reduced risk that copper prices surpass USD 10k in Q3.


• 3M LME copper resides at the bottom end of a USD 9,578.92-9,767.40/t range.

09 Jul 2025 - 10:20- ForexGeopolitical- Source: Newsquawk