EUROPEAN COMMODITIES UPDATE: Crude nurses recent losses whilst base and precious metals falter

Analysis details (10:59)

WTI and Brent front-month futures retrace some of yesterday’s losses with upside also spurred the recovery across the stock markets – with the former just under USD 108/bbl and the latter around USD 111/bbl. The crude complex came under further pressure yesterday in the aftermath of the OPEC+ meeting – which provided no surprises, but all focus will now turn to the group’s policy beyond August, which will be mulled over at the August 3rd confab. Meanwhile, one story that has been gaining attention today has been the Sakhalin-2 natural gas project. Russian President Putin signed a decree to transfer the rights of the project to a new Russian company, citing threats to national interests and economic security. Sakhalin-2 is part-owned by Shell (27.5%) alongside Gazprom (50%), Japan’s Mitsui and Co (12.5%) and Mitsubishi Corp (10%). The decree could force foreign shareholders to exit their investments as Moscow will have the final say on whether the foreign firms’ interests can be transferred to the newly-made Russian company. Furthermore, the Sakhalin-2 project is the closest LNG export plant to Japan – with Tokyo expressing concerns regarding LNG security, although Russia’s Kremlin said Russia sees no ground for LNG supplies from the project to be stopped. Japan relies on Russia for around 9% of its LNG, and Jefferies’ analysts suggest this could have huge ramifications for gas and electricity buyers in Japan. Elsewhere, spot gold is under pressure after the yellow metal breached USD 1,800/oz to the downside and sustained those losses throughout the morning – with the next level to the downside at USD 1,786/oz – the May 16th low. Base metals are softer across the board as recession woes grapple with the risk-correlated market. LME 3M copper briefly fell beneath the USD 8,000/t for the first time since January.

01 Jul 2022 - 10:59- MetalsResearch Sheet- Source: Newsquawk