EUROPEAN COMMODITIES UPDATE: Crude subdued but metals withstand a firmer Dollar, with silver outperforming

Analysis details (10:02)

• 
  WTI and Brent October futures are softer intraday amid a firmer Dollar alongside supply-side developments and demand-side concerns. Starting with the demand side, the EZ PMIs this morning underscored the European slowdown narrative with a EZ contraction of 0.2% expected in Q3, namely on the back of Germany. From a manufacturing perspective, a reduction in output was recorded in the region, with Germany’s firms reportedly reducing their output at a much faster pace than France. On the prices front, the EZ-wide report noted “The rate of input cost inflation across both sectors edged higher for the first time in 11 months, though remained marginally below the survey’s long-run average.” Back to the energy complex and on the supply side, the Turkish Energy Minister said an agreement has been reached to resume the flow of oil from the Iraqi-Turkish pipeline, according to Sky News Arabia. Earlier on Monday, the Iraqi Oil Minister met with his Turkish counterpart, and a statement suggested the oil ministers discussed joint relations in the oil and energy sector. This comes as Iraq to Turkey oil trade remained suspended for five months since an arbitration ruling on March 23rd found that Ankara owes Baghdad compensation for enabling unauthorized exports from Iraqi Kurdistan. Since then, flows of some 450k BPD of oil exports from northern Iraq to the Turkish port of Ceyhan have been shuttered. Sticking with the supply side, overnight the weekly Private Inventory data printed a headline crude draw of 2.4mln bbls, shallower than the expected draw of 2.9mln, with gasoline printing a surprise build of 1.9mln barrels (vs exp. -0.9mln), with participants on the lookout for confirmation from the weekly DoEs later today. Over to Australia, Woodside Energy is meeting unions for talks as strike threats loom over Australian LNG facilities. Talks are expected to continue until the evening, according to Bloomberg, with little known in terms of timings, and head of the ballot opening tomorrow for Chevron’s Gorgon and Wheatstone workers to ballot (updated analysis available on the Newsquawk feed). WTI found support just above USD 79/bbl after dipping from a USD 79.91/bbl high, while its Brent counterpart found an intraday base just below USD 83.50/bbl (vs high USD 84.26/bbl). Dutch TTF for September is softer by over 2% on the day around the EUR 42/MWh mark after reaching levels last seen in mid-June.


• Over to metals, spot silver is the standout gainer with nothing obvious in terms of fresh fundamental developments, but with desks citing bullish technicals at play as the metal soared above the psychological USD 23.50/oz mark which coincides with its 50DMA. Spot silver trades towards the top of a USD 23.39-75/oz range at the time of writing. Spot gold is slightly more contained but posts modest gains notwithstanding the firmer Dollar but against the backdrop of a decline in yields, after the yellow metal regained a footing above USD 1,900/oz in APAC trade, with the level later acting as support. Spot gold eyes its 200DMA to the upside at USD 1,908.39/oz. Base metals also see modest gains across the board despite the firmer Greenback, but with broader sentiment holding up despite the dire European PMIs.


• In terms of ags, Chicago wheat futures hold a modest upward bias amid two-way news, with reports suggesting Russia has reportedly attacked grain storage facilities in the Danube region overnight, according to Reuters, whilst reports also flag a US-led effort to explore an alternative route to exporting Ukrainian grains via the Black Sea after the Black Sea Grain deal expired last month.

23 Aug 2023 - 10:05- MetalsEU Research- Source: Newsquawk