EUROPEAN COMMODITIES UPDATE: Crude remains heavy while gold wanes and base metals take a breather

Analysis details (10:25)

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  WTI and Brent futures remain softer on the day an initial strong performance this week. Desks note contributing factors include banking woes, jitters over the US debt ceiling, and uncertainties about the strength of China's economic recovery. Over in the US, the DoE suggested it might begin replenishing the strategic petroleum reserves (SPR) after June, once mandated releases are completed. Despite market conditions meeting previous criteria for SPR refilling, no such action has been taken, possibly due to required maintenance at storage sites, according to ING. On the supply front, there have been more constructive headlines regarding the resumption of Kurdish oil flows via Ceyhan, Turkey, as indicated by Iraq's oil minister, although Turkish confirmation is yet to be received. Iraq’s oil minister has said that exports via Ceyhan would resume on May 13th. This could return approximately 450k BPD to the market. Lastly, desks suggest the increasing wildfire risks in Canada warrant close attention, particularly in oil sands areas of Northern Alberta due to rising temperatures – which could potentially impact oil output. WTI June trades around USD 70.50/bbl (vs high 71.50/bbl) while Brent July sits around 74.50/bbl (vs high 75.46/bbl).


• Over to metals, spot gold resides around this week’s lows, and just above the USD 2,000/oz level following yesterday's advances in the Dollar index, whilst fresh macro new flows remain light this European morning. Nonetheless, the yellow metal dipped under its 21 DMA (USD 2,007/oz) from a USD 2,017.60/oz intraday high and a USD 2,048.25/oz weekly peak. Base metals are mixed with 3M LME copper around USD 8,250/oz as it attempts to recoup some losses after prices slipped to their lowest point since November, amid concerns over China's economic rebound sparked by the softer-than-expected inflation data. Earlier in the year, copper had reached a peak of some USD 9,550.50/t, fuelled by hopes of a resurgence in Chinese demand after the abandonment of its zero-COVID policy.

12 May 2023 - 10:25- MetalsEU Research- Source: Newsquawk