EUROPEAN COMMODITIES UPDATE: Crude slips alongside base metals; spot gold benefits from a Dollar pullback

Analysis details (09:35)

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  WTI and Brent front-month futures have resumed the downward trend seen following this month’s OPEC+ meeting, with the former falling towards USD 68.50/bbl (vs high USD 70.33/bbl), while Brent slips to USD 73/bbl (vs high 74.87/bbl). There hasn’t been much in terms of recent fresh catalysts for the crude sector, while the downside cannot be pinned on sentiment – which tilts risk-on. Overnight, analysts at Goldman Sachs cut their December WTI crude price forecast to USD 81/bbl from 89/bbl, while it noted that Russian and Iranian oil supply are significantly beating expectations despite the Saudi cut. GS raised its H2 2023-2024 global supply forecast excluding core OPEC by around 800k bpd. Add to that, the desks offered cautious commentary on the Chinese property market, whereby GS warned that property weakness will likely be a multi-year growth drag on China's economy and it expects an L-shaped recovery in China's property market. Back to OPEC, over the weekend, the Saudi Energy Minister said Saudi Arabia and China have plenty of synergies and that demand for oil in China is still growing, while he wouldn’t be surprised if there will be more announcements soon on Saudi-Chinese investments and China will be more engaged with them on mid-stream business. Saudi’s Energy Minister also said the oil market is working against “uncertainties and sentiments," one week after the OPEC+ decision, according to CNBC. Stateside, on Friday, it was reported that the US DoE said it is to issue a new solicitation to buy another 3mln barrels for the strategic stockpile for delivery in September; and awarded contracts for its 3mln barrels of crude oil purchase for the SPR in August, averaging USD 73/bbl, according to Reuters.


• Over to metals, spot gold edges higher as the Dollar eases in the European morning, with the yellow metal back above its 10 DMA (1,960.37/oz) and around its 21 DMA (1,964.76/oz), with traders weary of the slew of upcoming tier 1 risk events, including US CPI tomorrow, FOMC on Wednesday, and the ECB and BoJ announcements on Thursday and Friday respectively. Base metals are mostly softer amid the ongoing growth woes surrounding China, with Goldman Sachs’ warnings on the persisting Chinese property market drag on the broader economy reverberating to the base metals complex – 3M LME copper holds above USD 8,300/t.

12 Jun 2023 - 09:35- MetalsEU Research- Source: Newsquawk