EUROPEAN COMMODITIES UPDATE: Crude subdued amid optimism surrounding Russia-Ukraine

Crude Oil: WTI Sep -0.3%, Brent Oct -0.3%

• Crude futures are once again softer after attempting to nurse losses overnight. This follows the decline yesterday amid Russia/Ukraine optimism following the discussion between the US and Russia, which is said to have made progress and with President Trump intending to meet Russian President Putin as soon as next week. Russia's Kremlin this morning confirmed that US President Trump and his Russian counterpart, Putin, will meet, and preparations for a summit in the next few days are underway.


• Meanwhile, eyes are also on the Russian oil import penalty, after US President Trump issued an executive order to impose an additional 25% tariff on India over its purchases of Russian oil, which would raise the total tariff on Indian imports to the US to 50% effective in 21 days on August 27th - with China also likely in the firing line given its purchases of the Russian commodity.


• That being said, analysts at ING highlight that oil prices moved lower despite Trump hitting India with a 25% import penalty. The desk says, "The reaction could suggest a few things. Firstly, the market is still hopeful that tariffs, effective 27 August, ultimately won’t be implemented. Secondly, the additional tariff won’t push India to stop buying Russian oil. Finally, even if India moves to alternative supplies, we may not see a reduction in global supply, with Russia finding other buyers for its oil." ING adds, "It will be worth keeping an eye on the Middle East oil market to see if there’s increased buying interest from Indian refiners. This would confirm whether they are starting to diversify away from Russian supply."


• Note, tomorrow (Friday) is the deadline the US set for Russia to come to a peace deal with Ukraine. If an accord is not reached, the US could announce further sanctions against Moscow alongside secondary sanctions.


• In terms of market commentary, Kuwait's oil minister expects crude prices to remain above USD 72/bbl, and noted that the market is healthy with moderate demand growth. Meanwhile, analysts at UBS maintain a neutral view on commodities and crude oil but continue to see gold as attractive. Brent crude is expected to trade within the USD 60–70/bbl range for now, with a possible move toward the lower end later this year, the desk said.


• WTI currently resides in a 64.12-65.08/bbl range while Brent sits in a USD 66.70-67.58/bbl range.

Precious Metals: Gold +0.3%, Silver +0.8%, Palladium +1.4%

• Precious metals are rebounding following the prior day's losses, with spot gold marginally gaining after recent dollar weakness and as reciprocal tariffs took effect.


• PBoC increased its gold reserve in July, marking nine straight months of purchases that are helping it diversify its holdings away from US dollars, according to Bloomberg. On that note, analysts at UBS "anticipate that central banks will purchase over 1,000 metric tons of gold again this year—twice the annual average of the previous decade. Gold has been a top performer, outpacing equities, bonds, and major currencies in both 2024 and 2025. Our analysis indicates that a mid-single-digit allocation to gold within a diversified portfolio is optimal. We forecast the gold price to reach USD 3,500/oz by end-2025."


• Ahead in terms of risk events, in Europe, the BoE is expected to cut rates by 25bps in a split vote (full preview available in the Newsquawk Research Suite). The US day features weekly initial jobless claims data (221k expected from 218k) and continuing claims (1.95mln expected from 1.946mln), Q2 unit labour costs (1.5% expected from 6.6%). Wholesale sales are seen rising 0.1% M/M (prev. -0.3%). The NY Fed's survey of consumer expectations (last time, 1yr inflation expectations fell by 0.2ppts to 3.0%, 3yr and 5yr expectations were unchanged at 3.0% and 2.6%, respectively). The Atlanta Fed will update its GDPnow tracking, which is currently modelling growth of 2.5% in Q3. Fed's Bostic (2027 voter) will deliver remarks.


• Price action this morning has been choppy for the yellow metal, in a USD 3,365.30-3,397.58/oz range, compared to yesterday's USD 3,358.25-3,385.36/oz parameter, and with the 50 DMA today at USD 3,347.74/oz.

Base Metals: 3M LME Copper +0.3%

• Copper futures are rangebound with a slightly firmer tilt amid the softer dollar, risk appetite in stocks, and the encouraging Chinese trade data overnight, which showed stronger-than-expected exports and surprise growth in the nation's imports.


• Analysts at UBS say, "Our outlook on base metals remains positive over the next 12 months, supported by expectations of greater clarity on tariffs in the second half and a more accommodative global monetary policy"


• 3M LME copper prices reside in a USD 9,672.90-9,740.00/t range.

07 Aug 2025 - 10:15- ForexGeopolitical- Source: Newsquawk