EUROPEAN COMMODITIES UPDATE: Crude slips on tariffs and growth fears

Crude Oil: WTI Mar -0.5%, Brent Apr -0.5%

• Subdued trade across crude oil following a rangebound overnight session after yesterday's slide in prices which ultimately resulted in WTI settling lower by USD 1.15/bbl and Brent with losses of 0.88/bbl.


• On the EZ growth front, this morning's metrics showed that the German economy shrank more than expected in Q4 (-0.2% vs. Exp. -0.1% (Prev. 0.1%)), not boding well on demand, and seemingly denting sentiment. EZ Flash GDP Q/Q was also disappointing (0.0% vs. Exp. 0.1% (Prev. 0.4%)).


• Recent losses have been attributed to tariff fears after US President Trump's recent rhetoric and ahead of the looming Mexico, Canada, and China tariffs on February 1st.


• Desks also note subdued overnight volumes amid Chinese market closures for the Lunar New Year.


• The Fed's announcement yesterday caused modest two-way action but prices were ultimately contained, with the ECB today poised to deliver their monetary policy announcement followed by a press conference (full Newsquawk preview available).


• WTI Mar resides in a USD 72.02-73.07/bbl range and Brent Apr in a USD 74.98-75.81/bbl parameter.

Nat Gas: Dutch TTF -0.6%, US Nat Gas -0.5%

• Consolidation after yesterday's rise which saw Dutch TTF prices surge to their highest level since October 2023, with desks citing unexpected supply disruptions and colder weather forecasts.


• Dutch TTF rose to levels close to EUR 51/MWh yesterday amid concerns driven by LNG supply issues from export facility disruptions and rising heating demand amid falling temperatures, whilst higher carbon prices contributed to the rally.


• In terms of European inventory levels, gas storage levels have declined to 55%, significantly lower than last year’s 72% and below the five-year average of 62%.

Precious Metals: Gold +0.6%, Silver +0.6%, Palladium +1.1%

• Precious metals trade higher across the board with upside seen ahead of the European open despite a lack of macro drivers at the time.


• That being said, it's worth noting that Chinese markets are away and thus potential European flows could've helped.


• The Fed policy announcement and press conference saw little major moves in spot gold.


• "The latest CME data shows that swap markets have trimmed their expectations for rate reductions this year by pricing in 43bp of cuts compared with 48bp before, with the first reduction not expected until mid-2025.", according to ING.


• Spot gold resides in a USD 2,758.39-2,776.64/oz range with the next upside level the 24th Jan peak (USD 2,786.06/oz).


• Ahead, the ECB announcement and press conference will be watched for volatility.

Base Metals: 3M LME Copper -0.4%

• Mostly firmer in what is seemingly broad-based metals upside following an uneventful APAC session with Chinese markets also away on holiday.


• Aluminium prices climbed yesterday after reports that the EU is planning a phased ban on Russian aluminium. The proposal includes a one-year import quota of 275k metric tonnes before a full ban takes effect.


• The latest data from the Shanghai Futures Exchange (SHFE) shows an increase in base metal inventories due to weak consumption ahead of the Lunar New Year holidays.


• 3M LME copper trades in a USD 9,042.10-9,119.15/t after briefly dipping under USD 9,000/t yesterday.

30 Jan 2025 - 10:15- EnergyEU Research- Source: Newsquawk