EUROPEAN COMMODITIES UPDATE: Crude marches higher but metals are mixed pre-Powell

Analysis details (09:43)

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  WTI March and Brent April futures continue to march higher in European trade in a continuation of the momentum seen in APAC markets, with the former eyeing USD 76.00/bbl to the upside (vs low USD 74.35/bbl) and the latter near USD 82.50/bbl (vs low USD 81.19/bbl), but off session bests. The gains across the complex come despite a lack of fresh newsflow as APAC reacted to Saudi raising Asia OSPs for the first time in six months, whilst additional strength could be attributed to hopes of a “soft landing” on the global growth front. Energy behemoth BP this morning said it expects oil prices to remain supported in Q1 by recovering Chinese demand, ongoing uncertainty around the level of Russian exports and low inventory levels, while it expects industry refining margins to remain elevated in the first quarter due to sanctioning of Russian crude and product. Meanwhile, comments were doing the rounds from the Goldman Sachs Global Head of Commodities Research Currie, who on Sunday in Riyadh, said he sees crude oil heading back above USD 100/bbl by year-end – namely due to Russian export sanctions and higher demand from China - “right now, we’re still balanced to a surplus because China has still yet to fully rebound", said GS’ Currie, who also warned that 2024 may potentially see the problem of low spare capacity. Desks also suggested supply concerns from the Turkish earthquakes seemingly partly drove the strength yesterday following the shuttering of the Ceyhan oil terminal. This morning, it was reported that Turkey has reportedly ordered the resumption of oil flows to the Ceyhan export terminal, according to Bloomberg. Ahead, the crude complex will likely be swayed by commentary from Fed Chair Powell, who will be making an appearance following the hot US jobs data on Friday.


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  Gas markets are relatively flat intraday thus far with a slight divergence observed between US Henry Hub and Dutch TTF. BP this morning said it “expects the outlook for global gas prices during the first quarter to remain dependent on weather in the Northern Hemisphere and the pace of Chinese demand recovery.”


• Over to the metals market, spot gold is modestly firmer and oscillates around the USD 1,875/oz mark as it tracks the indecisive Dollar, with its 50DMA seen around the 1,848.58/oz area. Base metals are mixed – 3M LME copper is modestly firmer around session highs as it makes its way back up to USD 9,000/t after testing USD 8,900/t to the downside earlier. Overnight, iron ore futures dropped in Singapore after falling on Monday and last week, with desks pointing to growing scepticism that China’s property measures will boost steel demand.

07 Feb 2023 - 09:45- MetalsEU Research- Source: Newsquawk