EUROPEAN COMMODITIES UPDATE: Crude slides and metals trade mixed ahead of FOMC

Crude Oil: WTI Mar -0.7%, Brent Apr -0.7%

• Softer trade across the crude oil complex amid a firmer dollar and following a choppy session yesterday which ultimately saw WTI settle higher by USD 0.60/bbl and Brent with gains of USD 0.31/bbl.


• Desks suggest the overall weakness in the oil market seen over the past few sessions likely emanate from the US preparing to impose tariffs on imports from Canada, Mexico and China from Saturday, with the WTI discount to Brent also narrowing as higher tariffs could tighten US supply.


• Elsewhere, the private inventory data was rather mixed: Crude +2.9mln (exp. +3.2mln), Distillate -3.8mln (exp. -2.3mln), Gasoline +1.9mln (exp. +1.3mln) Cushing -0.1mln - eyes on the DoEs for confirmation.


• Also it's worth noting the OPEC+ JMMC is set to meet on February 3rd, although no recommendations are expected despite Trump's demands for lower oil.


• WTI Mar currently resides towards the bottom of a USD 73.01-74.08/bbl range and Brent near the lower end of a USD 75.69-76.65/bbl parameter.


• Ahead, volatility can be expected from the weekly scheduled crude data from the DoE at 15:30GMT and then the FOMC rate decision and presser from 19:00GMT.

Precious Metals: Gold U//C, Silver +0.1%, Palladium -0.1%

• Mixed/flat trade across precious metals in the run-up to the FOMC policy announcement and Fed Chair Powell's press conference later today.


• The Federal Reserve is widely expected to hold rates at 4.25-4.50%, according to all 103 economists surveyed by Reuters; money markets see just a 3% probability of a 25bps cut. Attention will be on any guidance for future decisions, where focus will lie to assess when the Fed may start to lower rates again, with the committee continuing to be data dependent and evaluating the impacts of the Trump administration policies. Full preview available on Newswquawk.


• Spot gold resides in a narrow USD 2,757.46-2,766.26/oz range vs yesterday's USD 2,765.09 high and USD 2,734.81/oz low. The next upside level is Monday's peak at USD 2,772.74/oz.

Base Metals: 3M LME Copper -0.3%

• Mixed trade across base metals with upside hampered by the firmer dollar and cautious sentiment amid Trump's ongoing tariff threats, as also cited by several desks.


• As a reminder, US President Trump said on Monday that he plans to impose tariffs on copper, aluminium and steel, and that he wants to impose across-the-board tariffs that are “much bigger” than 2.5%.


• Ahead, the FOMC could bring some volatility in the base metals complex, but scheduled releases before that are rather light.


• 3M LME copper dipped under USD 9,000/t and resides in a USD 8,961.00-9,023.23/t range at the time of writing.

29 Jan 2025 - 09:55- MetalsEU Research- Source: Newsquawk