EUROPEAN COMMODITIES UPDATE: Crude remains underpinned while gold sits in a tight range ahead of this week’s risk events

Analysis details (09:29)

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  WTI October and Brent November futures are firmer intraday, although off best levels, but remain supported by expectations that some major G10 central banks are at or near the end of their tightening cycles, whilst the demand side is further bolstered by China’s economic recovery following a raft of stimulus from the government and central bank. Add to that, on the supply side, Saudi and Russia continue withholding additional barrels from the market until year-end, with the decision to be reviewed on a month-on-month basis. The expectations of a tight oil market were telegraphed by the recent trio of oil market reports, whilst last week’s Chinese activity data underscored a potential rebound after topping expectations. From a geopolitical standpoint, a prisoner exchange between Iran and the US which has been in the works for months is to take place later on Monday, a spokesman for the Iranian Foreign Ministry said, with Iran getting full access to South Korea's frozen fund today, although markets are yet to see the implication (if any) on the Iranian nuclear deal as the UK, France and Germany stated on Friday they will not lift sanctions on Iran in line with the timetable set out in the 2015 nuclear deal. Sticking with geopolitics, Saudi Arabia reportedly informed the Biden admin of its decision to halt all discussions of normalising ties with Israel on Sunday, citing Israeli PM Netanyahu's "extremist" government, according to unconfirmed reports cited by The Jerusalem Post. WTI trades on either side of USD 91.50/bbl and towards the top end of a 90.86-91.70/bbl parameter thus far, while its Brent counterpart oscillates around USD 94.50/bbl in a USD 93.93-94.78/bbl band.


• Over to gas markets, Dutch TTF is softer intraday around the EUR 35/MWh mark, with losses of over 3% at the time of writing, with a couple of developments to report in the complex. Firstly, Australia’s Offshore Alliance union said members began another 24-hour stoppage on Sunday at Chevron’s (CVX) Australian LNG facilities. On the flip side, the Troll field in Norway to start ramping up output on Monday following the prolonged shutdown, according to Bloomberg's Stapczynski.


• Over to metals, spot gold is caged to a tight range and is sandwiched between the 50 DMA (USD 1,931.44/oz) and  200 DMA (USD 1,922.61/oz) ahead of the raft of risk events slated for later this week including the FOMC, BoE, and BoJ. Base metals are mixed amid the cautious risk tone, with 3M LME copper flat around the USD 8,400/t mark after briefly topping USD 8,450/t earlier. Elsewhere, of note for the steel and iron markets, Swiss Steel withdrew its FY23 guidance as it suggested "The recovery of the specific demand in the European core market during the summer months did not materialize as expected by Swiss Steel Group”, and the “Group continues to be confronted with several challenges”. Swiss Steel also flagged “shrinking margins in the Stainless Steel Division, which was under pressure from imports from Asia.”.

18 Sep 2023 - 09:31- Research Sheet- Source: Newsquawk