EUROPEAN COMMODITIES UPDATE: Crude remains on the backfoot while metals march higher, although iron declined overnight amid Chinese intervention

Analysis details (10:02)

• WTI Dec and Brent Jan futures are softer around USD 75.75/bbl (vs high 76.61/bbl) and USD 80.30/bbl (vs high 80.98/bbl) following a session of selling on Tuesday to lows not seen in over a week - amid mixed US inventory data, slowing Chinese oil demand, and a firmer US Dollar, with the contracts settling lower by USD 1.60/bbl and USD 1.29/bbl yesterday respectively. Analysts at ING also suggest that “The builds have also been enough to push the prompt WTI time spreads back into contango.” Meanwhile, the White House Energy Advisor Hochstein told Bloomberg yesterday that the US will enforce oil sanctions against Iran amid the renewed conflict in the Middle East, in reference to what he said amounted to more than 1mln BPD of oil exports from Iran – he said, “Those numbers will come down.” On this, the desk at ING suggests “If we see stricter enforcement of these sanctions, we could possibly see anywhere between 500k-1mln BPD of supply lost, which would be enough to tighten up the global oil balance significantly through 2024. Offsetting any declines from Iran could be a marginal increase in Venezuelan supply (after the US eased sanctions) and the potential restart of Kurdish oil flows, which could bring in the region of 500k BPD back onto the market.” Oil-specific news has been light in the European morning, and ahead, US jobless claims and a myriad of central bank speakers could induce sentiment-driven price action in prices in the absence of scheduled complex-specific releases.


• Over to metals, prices are mostly firmer for both precious and base metals as the DXY trades off best levels, with spot gold moving back above its 50 DMA (USD 1,962.30/oz) from a USD 1,956.55/oz trough, but off its intraday peak of USD 1,968.61. Spot silver found support at its 200 DMA (23.27/oz) before climbing above USD 23.50/oz as it looks to the 22nd September peak of USD 23.78/oz. Base metals continue to be supported, with participants citing the recent string of softer-than-expected inflation data coupled with China’s recent activity numbers and stimulus. 3M LME copper has reclaimed a USD 8,300/t handle for the first time since the end of September, although iron ore futures fell overnight after China’s NDRC yesterday said it is investigating “unreasonably high prices” whilst the DCE adjusted its iron ore futures trading limit. LME zinc prices meanwhile slipped some 3% following a larger-than-usual build in zinc inventories (+65kt). Elsewhere, Bloomberg sources suggested US and the EU discussions on a permanent steel agreement have reportedly reached a stalemate– notes, earlier this week it was reported that the EU is said to be mulling the possibility of temporarily extending the truce with the US with regards to steel and aluminium trade to avoid the return of tariffs on as much USD 10bln of exports.

16 Nov 2023 - 10:03- Research Sheet- Source: Newsquawk