EUROPEAN COMMODITIES UPDATE: Crude slips, gas drops, and metals meander with modest gains

Analysis details (10:17)

WTI and Brent futures have declined below the levels seen at the reopening of electronic trade, but divergence is seen in terms of intraday changes between the contracts as the former saw no settlement on account of the US Labor Day holiday. This follows the OPEC+ decision yesterday whereby the group agreed on a 100k BPD cut in October quotas, taking quotas back to August levels. OPEC+ will be on standby and can call for a meeting at any time to further make changes to policy, Energy Intelligence reported. There has been no immediate headline to trigger the losses in crude oil in the early European hours, but losses come amid downside in the gas markets following reports that the European Commission’s energy agency recommends member states agree on “emergency wholesale price cap” measures on gas, according to a document seen by the FT. One option includes putting a limit on gas imported from Russia, whilst another option would see a country-to-country capping system based on their energy mix. The European Commission also suggested that the plan is to reduce electricity demand. Sticking with electricity measures, Incoming UK PM Truss is considering freezing energy bills until the next election (expected 2024), according to The Telegraph. It was later reported that Truss is lining up a GBP 130bln plan to freeze energy bills for households and GBP 40bln for firms in a GBP 170bln package, according to Bloomberg. WTI Oct resides around USD 88/bbl (vs high 90.40/bbl), whilst Brent Nov trades around USD 95/bbl (vs high USD 95.94/bbl), and Dutch TTF Nov and UK Oct gas prices fall 10% and 16% respectively. Over to metals, spot gold hovers around recent levels just above USD 1,700/oz - gold sees key support at 1699.1 and 1678.4, whilst resistance levels include 1,729 and 1,745. Base metals are mostly firmer with 3M LME copper posting mild gains above USD 7,500/oz but off best levels. 

06 Sep 2022 - 10:16- Research Sheet- Source: Newsquawk