EUROPEAN COMMODITIES UPDATE: Crude slips, but gold holds onto recent gains and base metals clamber off lows

Analysis details (10:08)

WTI and Brent futures have been slipping in a continuation of Friday’s price action and following some APAC consolidation. The crude complex looks ahead to the series of OPEC meetings this week, with the Joint Technical Committee (JTC) to meet on Tuesday at 12:00BST/07:00EDT – the group will review oil market developments. On Wednesday, the Joint Ministerial Monitoring Committee (JMMC) will review the findings of the JTC and make a recommendation to the decision-making OPEC+ group. The JMMC is set to meet at 12:00BST/07:00EDT, with the OPEC+ ministerial meeting to follow. Thus far, sources have suggested that OPEC+ will likely discuss either maintaining current production or increasing output by a small increment, with most of the sources cited by Reuters (five out of eight) implying that production will likely be held. Upping production will please Washington, with a Senior US official recently stating that the administration is optimistic that there could be some positive announcements coming out of OPEC. However, OPEC+ is burdened with limited spare capacity, with Saudi Arabia and the UAE likely to bear most of the output hikes on their shoulders. Reuters sources added that given the easing of prices since March, there isn’t a strong argument to further hike output at this meeting. Meanwhile, in the case of a hike, no increments have been flagged thus far and will likely be discussed at the meeting. It is plausible to expect source reports from today. Sticking with OPEC, reports suggested Libya’s output has hit 1.2mln BPD from the 1.1mln BPD reported last Tuesday – with the country currently exempt from OPEC+ quotas. The weekend also saw commentary from OPEC Secretary General Al-Ghais, who stated OPEC is not in competition with Russia and that Russia is a big main player in the world energy map with its membership in OPEC+ vital for the success of the agreement. Al-Ghais added OPEC doesn’t control oil prices but practices tuning markets in terms of supply and demand, while he added that the recent rise in prices is not just related to the Ukraine crisis but is also due to a lack of spare production capacity. Furthermore, he said the current state of the global oil market is very volatile and that the most important factor to affect oil prices by year-end is the lack of investments in the sector, according to an interview with Al-Rai newspaper cited by Reuters. WTI September resides just under USD 97/bbl, whilst its Brent counterpart dipped under USD 103/bbl. Spot gold holds onto gains above USD 1,750/oz but is relatively uneventful. Base metals are mixed but off worst levels as the Dollar declines and risk picks up a touch. Over in the agricultural space, reports suggested that the first ship with grains has left the Ukrainian port of Odesa following the grains deal last month.

01 Aug 2022 - 10:07- Research Sheet- Source: Newsquawk