EUROPEAN COMMODITIES UPDATE: Crude pressured by risk, gold indecisive and most base metals lift on a dollar-driven rise

Analysis details (09:28)

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  WTI and Brent June futures eked mild gains overnight but trimmed those gains in early European hours. The contracts settled lower by USD 1.69/bbl and USD 1.96/bbl respectively – owing to the risk-off sentiment seen yesterday. The modest overnight gains emanated from a bullish Private Inventory report ahead of today’s EIA report, which prompted consolidatory trading in futures during APAC hours. Thereafter, risk-aversion in Europe took over again and pressure WTI back under USD 77.50/bbl (vs high USD 77.85/bbl) and Brent sub-USD 81/bbl (vs high 81.45/bbl). Crude-specific newsflow has been light thus far, although Russian Deputy PM Novak suggested the total balance of oil supply and demand has not changed, whilst he also said OPEC+ does not regulate prices. Analysts at ING say “The oil market has already seen a fair amount of weakness over the last week as falling refinery margins raised concern about demand. From a technical point of view, we could still see a little bit more weakness in the market, given that prices still need to fill the gap left following the May-23 contract expiry. To close this gap we would need to see Brent trading towards USD 79.80/bbl.” Nat gas futures also succumb to the risk aversion, with both Dutch TTF and US Henry Hub softer intraday to the tune of 1.5-2.0%, which also comes as the EU launched its new joint gas purchase platform yesterday.


• Spot gold continues to trade indecisively as the yellow metal balances a softer Dollar with the deteriorating risk profile across the market. Prices remain in a tight range on either side of USD 2,000/oz, currently sandwiched between its 10 and 21 DMAs at USD 2,000.70/oz and USD 1,996.81/oz respectively. Base metals meanwhile are mostly firmer, benefiting from the pullback in the Dollar, but with upside capped as the risk tone remains cautious - 3M LME copper found some intraday support near USD 8,530/t. Elsewhere, desks note highlight iron ore prices briefly dipping under USD 100/t yesterday amid continued end-use demand, whilst the China Iron and Steel Association (CISA) recommended that domestic steel producers reduce output that results in losses, in light of weak demand and a sharp drop in domestic steel prices.

26 Apr 2023 - 09:28- MetalsEU Research- Source: Newsquawk