EUROPEAN COMMODITIES UPDATE: Crude softer amid Canada/Mexico tariff delays and China tariff retaliation

Crude Oil: WTI -2.1%, Brent Jan -1.4%

• Softer trade across crude after the US reached a deal with Mexico and Canada to delay tariffs.


• WTI sees deeper losses after experiencing larger gains on the initial US tariff announcement.


• Elsewhere, the new 10% tariff on all Chinese exports to the US took effect after the deadline passed. In response, China imposed 15% tariffs on US coal & LNG, and 10% tariffs on US oil, agricultural machines, and some autos.


• On OPEC, the JMMC yesterday was a non-event and unfolded as expected - recommended no changes to production policy, confirming plans to start unwinding voluntary cuts from April.


• Ahead, all eyes are on the Trump-Xi call (Time TBC). Traders will be eyeing the tone of the call alongside any future negotiations and updates on levies imposed by both sides.


• WTI Mar resides between USD 71-54-72.48/bbl while Brent Apr trades within USD 74.81-75.64/bbl.

Nat Gas: Dutch TTF -1.1%, US Nat Gas -3%

• Nat Gas futures across both sides of the pond give back gains this morning amid the outflows in energy from the aforementioned tariff delay deal the US reached with Mexico and Canada.


• European prices remain near recent highs after settling with gains of over 1% yesterday amid concerns over faster-than-expected storage drawdowns.


• EU gas storage is now under 53% full, down from 69% last year and below the five-year average of 60%, according to ING.


• Additionally, unplanned Norway outages have added to supply concerns, albeit on the flip side, Russian TurkStream gas flows rose 1.4 bcm in January, +1.7% M/M and +26% Y/Y.

Precious Metals: Gold U/C, Silver +0.3%, Palladium +0.2%

• Taking a breather following the prior day's price action, which saw spot gold hit a record high, whilst a deal delaying US tariffs on Canada and Mexico by at least a month provided some relief but did not erase uncertainty.


• ING notes that "total known gold ETF holdings have increased by more than 590k oz this year to 83.4m oz amid a move to safe-haven assets."


• Spot gold currently resides in a USD 2,807.27-2,824.65/oz range and within yesterday's USD 2,772.21-2,830.75/oz parameter.


• Ahead, all eyes are on the Trump-Xi call (Time TBC). Traders will be eyeing the tone of the call alongside any future negotiations and updates on levies imposed by both sides.

Base Metals: 3M LME Copper -0.1%

• Mostly lower trade across base metals after the aforementioned Chinese retaliation against the US tariffs.


• Furthermore, China imposed restrictions on tungsten, tellurium, bismuth, molybdenum and indium.


• Tungsten is critical for aerospace, defence, and industrial tools due to its hardness and high melting point. Tellurium is essential for solar panels, thermoelectrics, and steel alloys.


• Bismuth is used in pharmaceuticals, low-toxicity solder, and lead-free ammunition.


• Molybdenum strengthens steel alloys for aerospace, nuclear, and industrial applications.


• Indium is vital for semiconductors, touchscreens, and solar cells.


• 3M LME copper awaits the Trump-Xi call and resides in a narrow USD 9,107.65-9,177.30/t range at the time of writing.

04 Feb 2025 - 09:55- MetalsEU Research- Source: Newsquawk