EUROPEAN COMMODITIES UPDATE: Crude slips amid broader equity pressure in holiday thinned conditions, gold tarnished as yields climb

Analysis details (10:54)

The crude complex has commenced a holiday-thinned session and week off on the back foot, with both WTI and Brent lower by circa. 3.0%. Pressure in the benchmarks was most pronounced in the European morning alongside the release of the German Final Manufacturing PMI for April, which sparked noted equity pressure and debt strength, amid accompanying commentary that the output index has dropped into contractionary territory for the first time since H1-2020, during the initial COVID lockdowns. Downside in the crude space was seemingly exacerbated by a breach of psychological marks moving to troughs of USD 101.01/bbl and USD 103.58/bbl respectively. In terms of newsflow, focus has been centred on a potential Russian oil/gas embargo and continuing opposition to such a move from some EU member states, particularly Hungary. As such, the German Economy Minister Habeck remarked that they are not there yet on a boycott while sources via BBC’s Parker surmised that a ban on such oil imports by end-2022 looks tricky. Prior to such summaries, Hungary reiterated its opposition to an EU embargo; note, Politico indicated that it is possible a compromise could be sought, which would look to seek some form of exemption for the likes of Hungary and Slovakia. For the session ahead, we look to a meeting of EU Energy Ministers at 14:00BST/09:00EDT for any developments. Moving to metals, spot gold and silver are pressured ahead of Wednesday’s FOMC announcement where a 50bp move is expected, with the mornings pressure coming amid further upside in the yield space as the US 10yr nears 2.95% and the German equivalent was moving closer to 1.0% - before paring amid the German PMI inspired spike in the Bund. For reference, the yellow metal is dropping further from the USD 1900/oz mark, lows of USD 1876/oz.

02 May 2022 - 10:50- MetalsData- Source: Newsquawk