EUROPEAN COMMODITIES UPDATE: Crude resumes its decline, gold languishes near recent lows, but copper is bolstered on Chinese PMIs

Analysis details (08:53)

WTI Oct and Brent Nov futures consolidated overnight following a session of hefty losses on Tuesday, whereby the contracts settled lower by over USD 5 apiece. “It is difficult to pin the sell-off to a specific catalyst,” ING said, although the downward price action yesterday coincided with comments from Iraq with regards to upping exports to Europe, whilst broader market sentiment was on the back foot. Furthermore, Iranian press suggested that Iran and the US have reached an agreement on the revival of the JCPOA which will be announced in the next two or three weeks, according to a former IAEA official cited by Iran International English. However, a US State Department spokesperson later denied reports that an Iranian nuclear deal had been reached, according to CNN. It’s also worth keeping an eye on the Chinese COVID situation as reports in days pointed to a tightening of restrictions in some districts ahead of the CPC meeting in October – the Chinese public expects less restrictive measures after the meeting concludes. In terms of data, the weekly Private Inventories showed a surprise build in crude stocks (+0.6mln vs exp. -1.5mln), with the EIA release eyed later alongside its latest US SPR metrics. Elsewhere, Equinor's US manager said it is a difficult time to purchase volumes onshore or offshore given the price of commodities and noted the offshore rig rates are beginning to tighten but has not slowed down the company’s onshore investment. From a technical perspective, the Brent November contract fell below its 50 DMA (~100.26/bbl today), with the 200 DMA (USD 94.30/bbl) eyed for downside support. Ahead, today sees the OPEC JTC meeting whereby market fundamentals will be reviewed ahead of the Sept 5th OPEC+ confab. The JTC does not make a recommendation regarding oil policy, but desks are on the lookout for the changes in supply/demand forecasts.

Over to gas markets, as expected, flows from Nord Stream 1 were halted, with Russia citing maintenance for three days. Dutch TTF futures are on a firmer footing today following yesterday’s near-10% slump. Participants and officials will be waiting in angst to see if flows resume after the notified period, and at what volume. Siemens Energy said the Co. is not involved in the maintenance work for Nord Stream 1 pipeline, but experts are available if required.

In metals markets, spot gold is flat and languishes around yesterday’s lows under several DMAs, with support seen around the USD 1,711-1,714/oz area which marks some late-July lows. Conversely, 3M LME copper has been extending on gains with a boost from the above-forecast Chinese PMI metrics, but the contract remains under USD 8,000/t at the time of writing.

31 Aug 2022 - 08:52- Research Sheet- Source: Newsquawk

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