EUROPEAN COMMODITIES UPDATE: Crude loses momentum whilst precious metals are subdued, and base metals are hit by Chinese deflation

Analysis details (09:25)

• WTI Jan and Brent Feb futures edged higher overnight with the momentum somewhat petering out in early European hours, despite a lack of pertinent newsflow, but in the runup to a slew of risk events to round off the year, including US CPI tomorrow, the FOMC on Wednesday, ECB and BoE on Thursday. The complex largely overlooked the deflationary data from China over the weekend – which overall painted a picture of weak demand. Furthermore, geopolitical risk remains high with several updates over the weekend including an escalation between Israel and Lebanon’s Hezbollah. Yemen’s Houthi military spokesman also said they warn all shipping companies against cooperating with Israel and said if Gaza does not receive the food and medicine it needs, all ships in the Red Sea bound for Israel ports will become a target for their armed forces regardless of their nationality, according to Reuters. Meanwhile, China had an altercation with a Philippines fishing boat in disputed waters and also accused Japan of intruding territorial waters. WTI resides just north of USD 71.50/bbl (in a USD 70.92-71.81/bbl range) while Brent has just dipped back under USD 76/bbl (in a USD 75.57-76.50/bbl parameter). In terms of other newsflow, it was reported that sellers of sanctioned oil from Iran and Russia are said to be hiking prices to China after Venezuelan crude spiked following the suspension of US sanctions, according to trade sources cited by Reuters.


• Over to metals, spot gold is on a softer footing amid a firmer Dollar and in a week littered with G10 central bank events. Spot gold dipped under the 21 DMA (USD 2,004.40/oz), the USD 2,000/oz mark and under Friday’s USD 1,994.50/oz low, with the next downside level the 24th November low at USD 1,991.10/oz. Spot silver found resistance at its 50 DMA (USD 23.0994/oz) and briefly dipped under Friday’s 22.9177/oz low. Copper futures continue falling amid the broader cautious tone coupled with the downbeat Chinese inflation data over the weekend - which showed a larger-than-expected decline in China’s consumer inflation and factory gate prices - suggesting weak domestic demand. 3M LME copper fell from a USD 8,438/t high and sits around session lows of USD 8,355.50/t at the time of writing.

11 Dec 2023 - 09:25- MetalsData- Source: Newsquawk