EUROPEAN COMMODITIES UPDATE: Crude subdued but both precious and base metals extend gains irrespective of the Dollar’s intraday climb

Analysis details (10:39)

• WTI Dec and Brent Jan are softer intraday after settling relatively flat yesterday despite the softer inflation data and subsequent slide in the Dollar. WTI and Brent hit troughs of USD 77.79/bbl and 82.06/bbl respectively in the NY morning before reversing higher with risk assets, and on the Dollar's tumble, after the softer across-the-board US CPI report, peaking at USD 79.77/bbl and 83.97/bbl later in the morning. However, prices pared significantly into the afternoon and settlement. Thereafter, crude futures lacked conviction overnight after the prior day's whipsawing and inconsequential private sector inventory data before edging lower in European trade to print lows of USD 77.50/bbl and USD 81.75/bbl respectively as the Dollar regained some lost ground and stocks came off best levels.


• Technicians also note that January Brent has now taken out a clearly defined interim double bottom, in place just above 82.00/bbl. Elsewhere, Russian Deputy PM Novak is to meet with Russian oil firms today according to Russian press, whilst the EU Commission has reportedly suggested fresh sanctions on Russia, via Politico citing documents, including introducing a ban on diamonds and tightening other measures incl. oil price cap. In terms of energy commentary, Vitol said it expects a fairly balanced to slight surplus in the global oil market for 2024, while it added that non-OPEC supply has surpassed previous highs and continues to grow. Furthermore, it stated that it is premature to call for peak gasoline demand in China as gasoline car sales are still being added to the fleet. News flow for the complex has been light this morning but traders now look ahead to US Retail Sales and PPI data for October before the Biden-Xi meeting slated for the US afternoon. As a reminder, the US weekly EIA data will be released in two parts today to account for last week’s data blunder – last week’s data will be released at the usual time of 15:30GMT/10:30EST whilst this week’s data is slated for 18:00GMT/13:00EST.


• Over in the metals complex, spot gold topped yesterday’s USD 1,971/oz high around the time European cash markets opened, and irrespective of Dollar strength ahead of the Biden-Xi meeting on the sidelines of the APEC summit, with the yellow metal eyeing the 7th November peak at 1,978.36/oz. Spot silver narrowly outperforms in the precious metals space as it topped its 200 DMA (USD 23.26/oz) and now eyes USD 23.50/oz to the upside. Base metals are firmer across the board following the upbeat Chinese activity data overnight, with 3M LME copper gaining ground above USD 8,250/t and around session highs at the time of writing. The December copper contract on the Shanghai Futures Exchange edged higher overnight with a Singapore-based metal trader suggesting some profit-taking on LME and SHFE before the Chinese activity data. Iron ore futures meanwhile were boosted by over 2% overnight to a two-and-a-half-year peak following the Chinese metrics, with the Dalian Jan contract notching gains of 2.6% at one point.


• Looking at agricultural markets, US soybean futures hit a two-and-a-half-year high on Wednesday with analysts citing woes surrounding unfavourable crop weather in Brazil, adding to the rally that bolstered prices by over 10% over the last five weeks. Elsewhere, FT reported that Ukraine has reached a deal with global insurers to provide affordable cover to ships carrying grain and other critical food supplies from its Black Sea ports.

15 Nov 2023 - 10:42- Research Sheet- Source: Newsquawk