EUROPEAN COMMODITIES UPDATE: Crude remains heavy while metals trade mixed on a tentative Monday

Analysis details (09:32)

• WTI and Brent futures are softer intraday with the complex opening the week on a softer footing amid the sourced APAC tone coupled with the adherence to the Israel-Hamas truce and a lack of progress on the OPEC+ front. The sentiment in the oil market remains negative due to a dispute within OPEC+ over production quotas, says the desk at ING. ICE Brent crude oil prices have been declining for five consecutive weeks, and the upcoming OPEC+ meeting, which will be held remotely, shows progress in resolving issues with Angola and Nigeria regarding their 2024 production targets. Angola is underproducing while Nigeria is overproducing against their respective 2024 targets. Expectations suggest Saudi Arabia may continue its additional voluntary cut of 1mln into next year, with spring touted. The potential absence of this cut could lead to further market pressure. Desks also noted the possibility of a deeper production cut from OPEC+ to support the market in 2024. Thus far, sources have been quiet aside from Energy Intel's Bakr suggesting African states have not reached a resolution yet with regards to their baselines and the OPEC+ meeting is still due to take place on November 30th.


• Aside from potential OPEC+ sources, sentiment today could be at the helm of whether Israel and Hamas extend their truce beyond the initial four-day agreement. So far, the release of today’s hostages is said to be encountering some friction due to issues regarding the list of detainees to be released, although intense negotiations are underway to avoid a delay. WTI Jan sits with losses of over 1% at levels under USD 75/bbl (in a USD 74.67-75.72/bbl range) while Brent Feb trades under USD 80/bbl (in a USD 79.75-80.80/bbl).


• Spot gold meanwhile saw gains overnight which took the yellow metal north of USD 2,000/oz. Desks note the weakening USD and the interest rate environment have influenced gold prices. Despite higher rates dampening investment demand, central bank purchases have offset ETF outflows, says the desk at ING. “We continue to hold a constructive outlook on gold through 2024 and expect prices to hit record levels next year. Expectations that the Fed will start to cut rates through 2024 should see stronger investment demand re-emerging for gold, whilst expectations for a weaker USD should also provide further support.” Base metals are mixed and largely reflect the tentative market mood, with 3M LME copper failing to top USD 8,500/t whilst reports noted Panama’s Trade Ministry said Canada’s First Quantum sent notifications of intent to begin arbitration proceedings amid protests demanding to scrap the miner’s contract to run a key mine.

27 Nov 2023 - 09:32- Research Sheet- Source: Newsquawk