EUROPEAN COMMODITIES UPDATE: Crude remains underpinned but metals feel the pressure of the Buck

Analysis details (10:16)

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  WTI and Brent futures are firmer intraday and not far off session highs after resisting yesterday’s risk aversion to settle higher by around USD 0.70/bbl apiece, buoyed by bullish fundamentals and the prospect of a tighter market in Q4. The complex also shrugged off a surprise build in private inventories (Crude +1.6mln vs exp. -0.3mln), as traders look towards the weekly EIA inventory numbers for confirmations. The calendar is light today, with little seen in terms of crude-specific events before the next JMMC meeting slated for the 4th of October – which is expected to recommend unchanged output from the OPEC+ group. WTI Nov trades briefly topped USD 91.50/bbl as it trades within a USD 90.40-91.63/bbl range thus far, while its Brent counterpart tested but failed to breach USD 95/bbl to the upside earlier in the session, with stiff resistance seen at the psychological figure. Analysts at Rabobank suggest “The prominent factor setting the ceiling remains the macroeconomic sentiment and fears of a global recession. Time spreads have continued to strengthen, underpinning the physical and fundamental tightness of the market.” The desk forecasts this to continue into Q4, in turn giving Brent the momentum to touch USD 100/bbl, “however we see more strength in Q1 2024 to stay above the USD 100/bbl mark.”, says Rabobank. Meanwhile, Goldman Sachs sees a supply deficit of 0.8mln BPD next year, and a range of USD 80-105/bbl for Brent in 2024. Sticking with energy, Dutch TTF prices are softer intraday, with the October contract back under EUR 40/MWh but off worst levels at the time of writing, with newsflow for the complex light whilst desks eye the upcoming winter season. Rabobank warns that “there is upside potential for Henry Hub to USD 4 and TTF to the low EUR 60s if there are extended periods of cold and the macroeconomic outlook improves.”


• Over to metals, spot gold is subdued after finally falling back under USD 1,900/oz in APAC trade, although losses at the time of writing, are minimal as markets await the next catalyst. From a technical standpoint, the next downside levels for the yellow metal include the 22nd August low at USD 1,887.80/oz and then the 21st August trough at USD 1,884.00/oz. Base metals are mostly softer as DXY remains firm, although the complex saw a leg higher overnight after Chinese Industrial Profits were better than expected. Still, demand concerns linger as the nation is plagued by property woes. Furthermore, the PBoC overnight said it would implement monetary policy in a "precise and forceful" manner to support economic recovery. Nonetheless, the complex failed to garner much traction during the European session thus far, with 3M LME copper back under USD 8,100/t around the middle of a USD 8,076-8,124.50/t parameter.

27 Sep 2023 - 10:20- MetalsResearch Sheet- Source: Newsquawk