EUROPEAN COMMODITIES UPDATE: Crude pressured amid known headwinds, while Ags. slip on Black Sea reports

Analysis details (10:40)

• Crude benchmarks pressured with the overarching COVID headwind weighing on the demand side and overshadowing any potential upside from the USD’s pullback and some broader constructive trade developments from the G20. Currently, WTI Dec’22 and Brent Jan’23 are lower by just over USD 1/bbl and have printed fresh November troughs of USD 84.06/bbl and USD 91.52/bbl respectively. In terms of crude-specific developments, the IEA OMR looks for global demand growth to slow to 1.6mln BPD from 2022’s 2.1mln BPD as mounting economic headwinds factor; specifically, citing “China’s persistently weak economy, Europe’s energy crisis, burgeoning product cracks and the strong US dollar are all weighing heavily on consumption.”.


• More broadly, the G20 gathering has seen positive remarks from the Chinese and Australian President’s following their bilateral meeting, the first between leaders for several years, most pertinently the Australian PM says there were positive discussions on the trade embargoes that China has levelled on Australia. Broadly speaking, base metals are bid after spending much of the APAC session flat/mixed and unreactive to downbeat Chinese activity metrics. Separately, precious metals have lost much of their initial shine but are currently drawn to yesterday’s USD 1775/oz peak, as the yellow metal struggles to derive pronounced impetus from the softer USD as US equity futures continue to pick up.


• Elsewhere, ags. are in focus after Bloomberg reports that Russia is expected to agree to an extension of the Black Sea grain-export deal, with Wheat pressured by in excess of 1.0% on the supply-side implications of an extension. Alongside this, Russian Foreign Minister Lavrov said the UN will deal with the removal of barriers relating to Russian grain and fertiliser and that the G20 communique was making progress and should conclude tomorrow.

15 Nov 2022 - 10:38- MetalsEU Research- Source: Newsquawk