EUROPEAN COMMODITIES UPDATE: Crude recovers, precious metals trade sideways, and base metals slip further

Analysis details (09:55)

• WTI and Brent front-month futures are on firmer footings after settling lower by USD 1.03/bbl and USD 0.85/bbl respectively in choppy trade on Monday amid continued fallout from OPEC+ in the backdrop of cooling economic data and volatile Middle East tensions. WTI and Brent hit session lows of USD 72.63/bbl and 77.52/bbl, respectively, in the NY morning before rallying c. USD 2/bbl, which did coincide with Reuters reports that Turkey is warning of "serious consequences" if Israel tries to hunt down Hamas officials. But prices meandered lower again into the NY afternoon. There was only a fleeting spike higher on the Saudi Energy Minister saying to Bloomberg that OPEC+ cuts could "absolutely" go beyond Q1, whilst jawboning that the group's 2.2mln BPD cuts will be delivered. Elsewhere, Bloomberg reported the US DoE as saying it will buy back as much oil "as we possibly can", saying it is to take advantage of low oil prices to refill reserves, but reserve refill is limited by physical constraints. In the east, oil loadings from the Russian Black Sea port of Novorossiisk resumed on December 3rd after the storm, Reuters reported.


• In terms of today’s trade, prices were consolidating overnight but started to gain after the Chinese cash equity open and following the above-forecast Chinese Services PMI data which noted “Manufacturing and services industries expanded, with overall supply and demand both reaching three-month highs.”, adding that “the rate of new order growth was likewise the best recorded since August, albeit moderate overall.” Gains in the crude complex picked up following revisions higher in Services and Composite PMIs in major economies in Europe. Furthermore, reports suggested Russian President Putin is to discuss oil market issues in the UAE and Saudi Arabia, according to Tass, with Putin set to visit the countries on Wednesday for a one-day trip, whilst Iranian President Raisi is set to visit Russia on Thursday. Elsewhere, Libya's NOC Chair said the country’s current production stands at 1.3mln BPD vs 1.218mln on 6th Nov, and added that Libya is on track to increase production capacity to 2mln BPD in the next three-to-five years, and said hopefully oil production will increase by 100k BPD by end-2024. WTI Jan trades above USD 74/bbl (vs low 72.97/bbl) while Brent Feb mounted USD 79/bbl (vs low 77.94/bbl).


• Metals are mixed with precious metals moving horizontally as the DXY trades flat intraday spot gold and spot silver taking a breather following yesterday’s heft losses. Spot gold trades around USD 2,030/oz after reaching a peak of ~ USD 2,149/oz at the start of the week. Spot silver meanwhile re-eyes yesterday’s USD 24.41/oz low. Base metals are more subdued across the board despite the overall improved risk tone, with the complex weighed on by Moody’s cutting China’s outlook to negative from stable. Furthermore, although the morning's PMI data was revised higher, accompanying commentary remained mostly downbeat with the German release suggesting “negative growth for the fourth quarter. This would mean that Germany is in a recession after having registered a 0.1% drop in the third quarter”, according to S&P Global. 3M LME copper extends losses under USD 8,500/t and trades towards the bottom-end of a USD 8,355.50-466/t range. Dalian iron ore futures slipped overnight on continued concerns over market supervision, whilst Brazilian miner Vale expects the iron ore market to remain tight in the coming years, and said China cannot control the price of iron ore and that there is no supply coming.

05 Dec 2023 - 09:55- MetalsData- Source: Newsquawk