EUROPEAN COMMODITIES UPDATE: Crude subdued as OPEC underwhelms, while metals are boosted by a softer Dollar and firmer Chinese data

Analysis details (10:23)

• WTI Jan and Brent Feb futures are subdued intraday in the aftermath of the OPEC+ confab yesterday which ultimately underwhelmed the market given that output cuts are voluntary which raises questions on regarding the discipline of individual producers, with the crude contracts settling lower by around USD 2/bbl apiece. To recap, OPEC Secretariat announced several OPEC+ countries will conduct additional voluntary cuts to the total of 2.2mln BPD (vs. touted 1-2mln BPD). Saudi Arabia will extend its voluntary cut of 1mln BPD to the end of Q1 2024 with its production will be approx. 9mln BPD with Russia also to extend its voluntary cut to oil supplies until the end of Q1 2024, cut to reach 500k BPD. Kuwait, UAE, and Iraq also announced voluntary cuts, while Angola rejected its OPEC quota for 1.11mln BPD and said it will produce 1.18mln BPD. It was confirmed that Brazil will join OPEC+ from January 2024. “A concern for the market is the fact that these announced cuts were voluntary rather than OPEC+ wide cuts. These voluntary cuts suggest that it is becoming difficult for members to agree on OPEC+ cuts”, say analyst at ING, “Therefore, if further action is needed in future, it will become increasingly difficult for the group to respond.” 


• OPEC aside, geopolitics remains a concern after the Israel-Hamas truce expired and heavy firing resumed, with the Israeli army also raising the alert on the border with Lebanon, although energy markets are seemingly unfazed by the resumption in clashes thus far and remain subdued from the OPEC overhang. 


• WTI Jan resides just above USD 75.50/bbl (USD 75.36-76.34/bbl range), while Brent Feb resides around USD 80.50/bbl (in a USD 80.13-81.15/bbl range).


• Elsewhere, spot gold holds an upward bias as the Dollar remains subdued, with the yellow metal testing resistance at the USD 2,050/oz mark in the European session as it eyes Wednesday’s USD 2,051.89/oz peak. Base metals are firmer across the board as the softer Buck, upbeat Chinese data overnight, and upward bias in risk sentiment in Europe. 3M LME copper topped the USD 8,500/t mark from a USD 8,463/t low (and USD 8,569.50/oz). Dalian iron ore futures also traded with gains of some 2% on the back of Chinese data, but nonetheless recorded its first weekly loss in seven weeks amid Chinese intervention in the iron market to regulate prices.

01 Dec 2023 - 10:23- Research Sheet- Source: Newsquawk