EUROPEAN COMMODITIES UPDATE: Crude trends lower whilst gold consolidates and base metals trade mixed

Analysis details (10:59)

WTI and Brent front month futures continue declining as OPEC+ heads gear up for their meeting at 12:30BST/07:30EDT, but before that the JMMC is slated for 12:00BST/07:00EDT. This meeting will be more convoluted than the July confab as the group is set to decide on policy for September. Thus far, sources have suggested that OPEC+ will likely discuss either maintaining current production or increasing output by a small increment, with a narrow majority of the sources cited by Reuters (five out of eight) implying that production will likely be held. At the prior meeting, the group agreed to hike output by 648k BPD in August, in line with prior plans, which reverses the COVID cuts implemented in 2020, but many members have fallen short of targets. There is scope for a modest symbolic increase in output, but the demand backdrop has also been downgraded as per the JTC’s findings yesterday expect supply surplus on the global oil market in 2022 will be 0.8mln BPD (-200k BPD from the prior forecast) on average in the base case. The alliance's oil market analysis is based on a modest slowdown in GDP growth, according to delegates cited by EnergyIntel. Further, the JTC report shows growth in global oil demand slowing to 2.7mln BPD in 2023 from 3.4mln BPD this year (full rolling headline on the Newsquawk headline feed). Aside from that, the geopolitical space will also be eyed as US House Speaker Pelosi leaves for Taiwan, with eyes on China’s next move. WTI Sept resides just above USD 93/bbl while Brent Oct trades back under USD 100/bbl. Elsewhere, spot gold is relatively stable above USD 1,750/oz but under its 50DMA at USD 1,791.40 today. Elsewhere, base metals are mixed with LME copper flat at around USD 7,775/t. On that note, Citi released its base metals forecasts for the next 6-2 months, which see copper at USD 6,600/t, nickel at USD 19,500/t, and zinc at USD 3,000/t. The bank recommends bearish positions in copper and nickel amid a likely European downturn in the next 6-9 months.

03 Aug 2022 - 10:59- Research Sheet- Source: Newsquawk