EUROPEAN COMMODITIES UPDATE: Crude subdued, gold flat pre-data and base metals feel some reprieve

Analysis details (10:12)

• WTI Jan and Brent Feb futures consolidated overnight after settling lower by USD 0.72/bbl and USD 0.84/bbl respectively in what was a choppy session. To recap, front-month futures hit intra-day session lows yesterday on some volume, which did coincide with some reports that China's authorities have called on schools nationwide to enhance disease monitoring amid the uptick in respiratory illnesses - although the November lows for WTI and Brent of USD 72.16/bbl and 76.60/bbl were rejected firmly, and benchmarks pared losses from there. The upside later in the NY morning yesterday was accentuated after Russian press reported Russian Deputy PM Novak saying Russia will start tightening restrictions on oil and fuel supplies under OPEC+ as early as December and that it intends to fully fulfil its obligations to voluntarily reduce oil and fuel supplies as early as January, although the strength failed to sustain, and prices meandered back lower again into settlement, with Brent hitting a marginal new session low of USD 77.09/bbl as it weighed on by the rising Dollar.


• Price action in APAC hours was uneventful with little reaction seen to the surprise build in private inventories (Crude +0.6mln vs exp. -1.4mln), while crude futures went into the European session with a modest positive tilt amid the broader constructive risk tone ahead of another raft of US data. WTI and Brent have resumed downward price action in recent trade, with the former around the USD 72/bbl mark and the latter around USD 77/bbl. Crude traders will also be focused on Russian President Putin’s trip to the Middle East, where he is to visit the UAE and Saudi on a day trip, with timings unknown at the moment. Nonetheless, OPEC cooperation is expected to be on the agenda. Geopolitics meanwhile saw no major updates although a couple of bases housing US troops have come under attack but rebels in the region.


• Over to metals, spot gold and silver have come off APAC highs but trade within yesterday’s ranges, with the yellow today trading within a USD 2,017.29-2,035.97/oz band in the run-up to US data, whilst spot silver sits within a 24.07-36/oz band. Base metals bolstered by the broader risk sentiment and following the gains in some major APAC markets overnight. 3M LME copper rose from a USD 8,352/oz trough to a high of USD 8,419/oz while iron ore prices rose on both the Dalian and Singapore exchanges with traders citing positive economic data and easing intervention concerns. Mining giant Rio Tinto also delivered some commentary on the metal and suggested China’s iron ore demand is 'very decent' amid the auto sector boom.

06 Dec 2023 - 10:15- Research Sheet- Source: Newsquawk