EUROPEAN COMMODITIES UPDATE: Crude swings between gains and losses in choppy trade while industrial metals pull back as risk aversion overshadows Chinese stimulus

Analysis details (09:48)

• WTI and Brent front-month futures are experiencing another morning of choppiness in summer markets, the losses seen since the European cash open seemingly a function of the broader risk aversion and downbeat Chinese data. The broader risk profile deteriorated despite a lack of fresh fundamental factors, but nonetheless, crude prices took their cue from sentiment after digesting another slew of weak Chinese data – with Industrial Production and Retails sales both missing forecasts by rather sizeable margins, underscoring the theme of sluggish Chinese demand. That being said, China delivered several rate cuts this morning – to its MLF, 7-day Reverse Repo, and SLF rates, in a bid to inject liquidity. Furthermore, the complex could be cushioned by Bloomberg sources this morning China reportedly mulls cutting its stamp duty to revive the slumping stock market; details on timing and size are yet to be determined, and there is no guarantee the proposal will be approved. Crude prices remain within yesterday’s ranges at the time of writing in what has been a choppy morning for the complex, with WTI Sept just under USD 82.50/bbl after finding some support at USD 82.00/bbl; Brent Oct sits in the middle of a USD 85.78-68 intraday parameter.


• Spot gold is subdued this morning as the Dollar clawed back some earlier losses in early European trade, with the yellow metal dipping under its 200 DMA around USD 1,905/oz – with spot gold currently in a narrow USD 1,903-1,908/oz range. Sticking with precious metals, UBS lowered its palladium price forecast and recommends investors use price bounces to reduce allocation to palladium. UBS also cut its platinum price forecasts by USD 100/oz for December 2023 to June 2024 period, with the new forecast for 2024 set at USD 1100/oz. The Swiss bank said the substitution from palladium to platinum and more EVs being sold will likely push palladium into a structural surplus next year. Elsewhere, base metals have also seen a choppy session thus far with the initial mild support from the aforementioned Bloomberg sources dissipating amid this morning’s risk aversion. 3M LME copper briefly dipped under USD 8,200/t after falling from a USD 8,343/t peak

15 Aug 2023 - 09:50- Research Sheet- Source: Newsquawk