EUROPEAN COMMODITIES UPDATE: Crude recoils from overnight lows whilst gold experienced a brief overnight spike to ATHs

Analysis details (10:07)

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  WTI and Brent futures are firmer following the recent hefty losses in the complex. WTI June and Brent July slumped to lows of USD 63.64/bbl and USD 71.28/bbl respectively overnight as futures reopened and reacted to reports PacWest Bancorp (PACW) was said to weigh strategic options including a sale – further fuelling US banking sector woes. Prices have since recovered from those levels with the former now around USD 69/bbl and the latter hovering around USD 73/bbl, with downside somewhat limited by jawboning from Russian Deputy PM Novak. The de-facto Russian oil head suggested the fall in oil prices requires a detailed study for possible OPEC+ response and commented that maybe the oil price fall will be short-term. Novak added that Russia "abides" by its oil output cuts, whilst its targeted oil output reduction stands at 500k BPD from February. As a reminder, delegates yesterday suggested OPEC+ will continue with plans to meet in June as opposed to conducting an earlier meeting. Elsewhere Iraq's Oil Minister expects to come to a final agreement with the KRG to recommence northern oil exports within two weeks, this follows reports Baghdad and the KRG have not reached an agreement needed to restart northern oil flows. As a reminder, Turkey halted Iraq's 450k bpd northern exports on March 25 following an International Chamber of Commerce (ICC) arbitration ruling. Over in Europe, Shell reported blockbuster earnings while its CEO suggested they are getting close to Chinese levels of oil demand last seen in 2019. On the gas front, Shell sees a strong rebound in gas demand in China's services sectors, but less in the industrial sectors, while the Equinor CEO sees strong gas demand in Q2, and plans full production.


• Over to metals, the aforementioned banking jitters saw spot gold shoot higher by some USD 40/oz overnight – very briefly to a fresh all-time high on some charts, north of USD 2,080/oz. The yellow metal immediately pulled back to levels under USD 2,050/oz and now trades lower intraday in the European morning as the DXY claws back some ground ahead of the ECB. Base metals are mostly firmer - underpinned as its largest purchaser China returned to the market from a 5-day closure. Elsewhere steel name ArcelorMittal, alongside earnings, said world ex-China apparent steel consumption growth for FY23 is forecast at +2-3% vs 2022. Co. also added that overall economic sentiment has improved, driven by Europe, but remains relatively subdued. ArcelorMittal also said automotive recovery is supportive to flat rolled products, and destocking has concluded - resulting in an improvement in apparent demand and tightening supply/demand. The firm also said inventories are lower than normal as restocking is yet to take place.

04 May 2023 - 10:11- Research Sheet- Source: Newsquawk