EUROPEAN COMMODITIES UPDATE: Crude on the back foot, base metals mixed, and gold flatlines as markets await a fresh catalyst

Analysis details (10:27)

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  WTI and Brent December futures are softer intraday following a session of gains on Wednesday, which saw the benchmarks settle higher by USD 1.83/bbl and USD 1.60/bbl respectively yesterday, albeit off best levels amid the risk aversion counterbalancing geopolitics, strong China data, and bullish US inventories. WTI and Brent front-month contracts hit peaks of USD 89.88/bbl and 93.00/bbl, respectively, late in the European morning, with a boost at the time seen from Iran floating the idea of an oil embargo on Israel amid the conflict in the region. On this, analysts at ING suggest “Israel is a relatively small oil importer, importing a little over 200k BPD with the two largest suppliers being Kazakhstan and Azerbaijan at the moment. If we were to see a disruption to these flows, given the relatively small volumes, Israel should be able to quite easily find alternatives.” Meanwhile, OPEC+ sources suggested the group has no plans to call an extraordinary meeting or immediate action following Iran’s oil embargo request. In terms of today’s session, the broader risk aversion and firmer Dollar are weighing on the complex in the absence of any major newsflow, and with participants continuously assessing the impact of Middle Eastern geopolitics on the balance of supply and demand for energy. WTI resides towards the bottom of a USD 86.21-87.36/bbl intraday range thus far, with its Brent counterpart similarly heavy within USD 90.25-91.35/bbl confines. Sticking with energy, Dutch TTF prices have also slipped over 5% at the time of writing to levels back around EUR 48/MWh as the Chevron Australia strike, which was to commence today, was averted earlier in the week. Traders are also keeping an eye on the upcoming winter heating season, with recent reports suggesting Chinese regulators are said to have asked its largest state-owned nat gas supplies to replenish storage facilities heading into peak winter.


• Over to metals, spot gold is flat and trades on either side of USD 1,950/oz and holding onto the bulk of its recent geopolitically driven gains, with the yellow metal still well within yesterday’s USD 1,923.23-62.67/oz parameter. Spot silver is holing into modest gains on either side of the USD 23/oz mark but well within yesterday’s 22.68-23.32/oz range. Base metals are mixed with 3M LME copper trading on either side of the USD 8,000/t and within tight USD 7,958-8,024/t parameters following modest APAC weakness as the region conformed to risk aversion. That being said, iron ore futures edged higher on Thursday with the Singapore Nov Contract rising some 1% at one point, with market participants citing tailwinds from this week’s Chinese GDP and industrial output data.

19 Oct 2023 - 10:30- Research Sheet- Source: Newsquawk