EUROPEAN COMMODITIES UPDATE: Crude surges on geopolitics

Crude Oil: WTI Feb +2.5%/Brent Mar +2.2%

• WTI and Brent prices are firmer this morning despite the stronger Dollar but against the backdrop of geopolitics.


• Prices gained from the open amid expectations of Russian crude supply disruption after the US recently toughened sanctions on Russia's energy sector targeting more than 200 entities and individuals, while it was also reported that Israel struck a number of Hezbollah targets in southern Lebanon.


• That being said, a couple of short-lived downticks were seen on reports that a breakthrough has been reached in Doha, a final draft of the Gaza Ceasefire and hostage release has been sent to Hamas and Israel for approval, according to an official cited by Reuters. However, it was then reported that Israel has reportedly not received a draft proposal for the Gaza ceasefire deal, according to an Israeli official.


• Elsewhere, Goldman Sachs said tougher US and UK sanctions on Russian oil could lift oil prices above USD 85/bbl.


• Meanwhile, ING posits that the new US sanctions on Russian oil could disrupt up to 700k BPD of crude exports, potentially eliminating the expected global oil surplus in 2025, but "potentially, Russia will once again be able to take action to minimise the impact of these latest sanctions", the desk says.


• WTI trades towards the upper end of a USD 76.54-78.58/bbl range while Brent resides in a USD 79.76-81.68/bbl parameter.

Nat Gas: Dutch TTF Mar+4%/ US nat gas Feb +4.8%

• A firm session across gas markets amid colder weather coupled with a broader upside in energy markets amid the aforementioned geopolitics.


• Meanwhile, Goldman Sachs suggested that TTF price risks remain skewed to the upside despite moderation in cold weather. Goldman Sachs also commented that while the latest round of sanctions has mostly focused on oil and the potential impact on LNG supply is very limited, it keeps global gas balances more vulnerable at the margin to tightening shocks and to the risk that TTF might need to price oil-switching in a EUR 65-86/MWh range this summer.

Precious Metals: Gold -0.2%, Silver -0.9%, Palladium -1.5%

• Spot gold is subdued amid the dollar strength but losses are cushioned by ongoing geopolitics alongside the risk-off sentiment.


• Prices were indecisive in APAC trade as participants reflected on the ramifications of the recent strong jobs data and amid the risk-off conditions.


• Spot gold currently resides in a USD 2,679.31-2,693.55/oz parameter and within Friday's USD 2,664.07-2,697.95/oz range.

Base Metals: 3M LME Copper +0.3%

• Copper holds a mild upward bias despite the dollar's strength and risk aversion, possibly on the back of better-than-expected Chinese trade data overnight coupled with hopes of a Chinese stimulus. Desks also suggested iron ore prices gained almost 2% on the back of stimulus prospects.


• 3M LME copper currently resides in a USD 9,080.50-9,150.00/t range.

13 Jan 2025 - 09:55- MetalsGeopolitical- Source: Newsquawk