EUROPEAN COMMODITIES UPDATE: Crude succumbs to slipping sentiment, metals remain resilient

Analysis details (10:45)

• Crude benchmarks spent much of the European morning resilient to the gradual downtick in broader risk appetite. However, the complex has most recently moved in-line and is new essentially flat and echoing the price action of European/US equity futures. In metals, spot gold remains firmer given the lessening risk appetite and as the USD fails to derive any significant benefit from this.


• As it stands, WTI Aug’23 and Brent Sep’23 are posting gains of USD 0.10-0.20/bbl and are at the lower-end of fairly narrow USD 73.02-73.75/bbl and USD 77.65-78.40/bbl parameters with specifics somewhat light. Initial upside was seemingly a function of the softer USD and robust APAC tone, which itself was aided by stimulus hopes. Thereafter, the session has been dominated by geopolitical headlines emanating from the NATO summit after Turkey’s u-turn on Sweden and further language from the bloc broadly around Ukraine’s ascension process. Though, overall, fresh developments on this have been limited in the European morning.


• Elsewhere, Bloomberg’s Blas points out that following Saudi and others extending their production reductions into August, Medium sour crude continues to tighten and as such Russian Urals prices are lifting notably and nearing a breach of the USD 60/bbl G7 price cap. For the session ahead, the schedule includes the EIA STEO.


• Moving to metals, spot gold is firmer and towards the top end of USD 1924-38/oz parameters, despite a brief dip earlier when the USD attempted to benefit from the initial deterioration in risk appetite. Though, as mentioned, this was shortlived and the yellow metal continues to derive support from sentiment and the softer USD. However, this price action has not seen any real extension following the soft July ZEW figures, perhaps as the attached commentary is in-fitting with other survey’s and the trends from June. Finally, base metals are hanging onto their APAC gains spurred by further Chinese stimulus hopes, despite the broader dip in risk appetite.

11 Jul 2023 - 10:35- MetalsEU Research- Source: Newsquawk