EUROPEAN COMMODITIES UPDATE: Crude slips, gold tests 1,700/oz, and copper dented by China

Analysis details (10:54)

WTI and Brent futures have resumed downward action following an APAC session of consolidation, although prices looked heavy overnight. WTI Oct resides around USD 88/bbl (vs high 89.63/bbl) while Brent Nov trades around USD 94/bbl (vs high 95.68/bbl). The downward bias resumed as China locked down its Chengdu city of 21mln people amid COVID woes, with all businesses to close except for supermarkets, pharmacies and hospitals. Meanwhile, traders are looking ahead to Monday’s OPEC+ meeting, whereby expectations are leaning towards an extension of current quotas following weeks of fluidity in forecasts, as oil officials floated the idea of tightening output to stabilise markets whilst sources intimated a cut is contingent on an Iranian nuclear deal. There has not yet been any guidance on the details, i.e., the length of extension nor any touted size of potential cuts. The OPEC+ Joint Technical Committee (JTC) yesterday, under a revised analysis due to underproduction by members, cut its 2022 surplus forecast by half to 400k BPD and flipped the forecast for 2023 to a deficit of 300k BPD. Assuming producers hit quotas, the OPEC+ JTC sees the 2022 oil market surplus at 900k BPD, +100k BPD from the prior report. OPEC+ JTC acknowledged the relevance of the Saudi Energy Minister's comments on volatility and thin liquidity of crude markets, according to Reuters citing a document. Elsewhere, spot gold is meandering just north of USD 1,700/oz after testing the figure to the downside. Finally, base metals are lower across the board following the downbeat Chinese manufacturing PMI overnight alongside news of stricter Chinese lockdowns in some regions – LME copper has declined further and is closer to USD 7,500/t than USD 8,000/t.

01 Sep 2022 - 10:54- MetalsData- Source: Newsquawk