EUROPEAN COMMODITIES UPDATE: Crude remains underpinned by OPEC, gold moves with the Dollar, and base metals see a mixed session

Analysis details (09:35)

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  WTI May and Brent June futures extend on gains after settling higher by USD 4.75/bbl and USD 5.04/bbl respectively. The complex remains underpinned by the surprise output cut made by OPEC over the weekend - which the group flagged as a precautionary measure to support the stability of the oil market. Reports via Bloomberg yesterday suggested OPEC+ wants to make oil speculators think twice with the shock cut, whilst US President Biden said it is not as bad as you think regarding the OPEC+ oil output cut, according to Reuters. Furthermore, US Treasury Secretary Yellen said the OPEC+ production cut is a very unconstructive act and not positive for global growth, while she added that lower gasoline prices have helped with holding down inflation and the OPEC+ move will not help. Yellen also stated the OPEC+ move adds to the uncertainty and burdens on consumers at a time when inflation is already high and she does not see OPEC+ as having an impact on the appropriate level of the western price cap on Russian crude, according to Reuters. Further on the supply front, Iraq Federal Government and Kurdistan Regional Government are to announce a final deal to resume oil exports, via Reuters citing sources - Iraq's northern oil exports are expected to recommence on Tuesday. This follows from Iraq's federal government and the Kurdistan Regional Government (KRG) coming to an initial agreement to restart northern oil exports this week. Prior to this, Turkey stopped pumping some 450k BPD of Iraqi crude via a pipeline from the Fish-Khabur border area to its Ceyhan port on March 25th, after Baghdad won an arbitration case arguing that Turkey had violated an agreement by allowing KRG exports without the federal government consent. Nonetheless, the oil complex is seemingly underpinned by OPEC. WTI trades around the USD 81/bbl mark (vs low 80.32/bbl) while Brent trades near USD 85.50/bbl (vs USD 84.84/bbl).


• Spot gold trades flat in a tight range, propped up by a softening Dollar after some modest APAC weakness, although the yellow metal remains within yesterday’s 1,949.81-90.54 range. Base metals are mixed amid the indecisive mood across the markets, with 3M LME copper trading near USD 8,950/t in a USD 8,917-63/t range. Analysts at ING suggest the copper cash/3m spread on the LME reached a high of USD 21/t backwardation yesterday, the highest level since November. “The strength in this spread has coincided with LME inventories trending lower since mid-March, re-igniting concerns over a tightening market. Chile, the top copper producer, reported that its February copper production fell to its lowest in six years. Chile accounts for a quarter of the world’s mined copper”, the bank said.

04 Apr 2023 - 09:35- Research Sheet- Source: Newsquawk