EUROPEAN COMMODITIES UPDATE: Crude pares initial premia as we await updates from Trump

WTI/Brent: -0.1%/-0.2%

• Crude benchmarks find themselves at session lows though the pressure is only modest thus far, WTI and Brent at the trough of USD 72.63-49/bbl and USD 75.69-76.44/bbl bands.


• Focus of course on the tariff situation and in particular Trump’s remark that he would be deciding by Thursday (i.e. yesterday) on whether or not to impose tariffs on oil on Canada and Mexico. As it stands, we are yet to hear from POTUS and/or his officials on any such measure(s).


• While we await updates on this, crude has been gradually moving off best levels with the DXY remaining near highs and exerting pressure on the complex. Though, as it stands, it looks like the pullback is largely an unwinding of Trump-driven premia.


• Amidst all of this, geopolitical focus has heightened though we have not seen a reaction to reports that Israel’s Netanyahu that a meeting will be held today during which a return to full combat may be discussed.


• Note, India’s Chief Economic Adviser says they are not expecting any major upside risk to crude oil prices at this point.

Gold: +0.1%

• At record highs above the USD 2800.00/oz mark. Thus far, has eclipsed the figure by exactly one dollar.


• Upside which has been driven despite the USD strength and overnight yield advances as the yellow metal gleans haven demand from potential Trump tariffs.


• Ahead, as is the case for markets broadly, the complex will look to US PCE for the next inflection point (in the absence of a tariff update).


• More broadly, the week-to-Wednesday BofA flow show showed that investors drew some USD 0.5bln from gold

3M LME Copper: -0.5%

• Base metals are mixed, albeit with a slight downward bias; price action has been relatively rangebound with 3M LME copper within a USD 9,068-9108.80/oz range.


• In terms of the macro environment, traders will be wary of the recent US President Trump rhetoric regarding Canada/Mexico. The President said he will put a 25% tariff on Canada and Mexico because of fentanyl, according to Bloomberg; the decision was to be made overnight on whether to impose tariffs on oil on the regions – no updates have been seen since, and it is unclear if these may include tariffs on the metals complex.


• Thereafter, the WSJ reported that the US Administration could announce new tariffs by Saturday, but with a grace period which could allow for negotiations. Whilst a significant turnaround was seen in European equities, the metals complex has remained within familiar confines.

31 Jan 2025 - 10:05- ForexEU Research- Source: Newsquawk