EUROPEAN COMMODITIES UPDATE: Crude trims earlier losses, gold meanders around a key level, but base metals are subdued post-Chinese trade data

Analysis details (10:25)

WTI and Brent futures have been bouncing off worst levels after printing multi-month lows. WTI October resides around USD 86.50/bbl (vs low 85.08/bbl) whilst Brent November trades around USD 92.50/bbl (vs low 91.20/bbl). In terms of recent developments, on the OPEC front, Saudi released its monthly Official Selling Prices (OSPs) for October, with heavy cuts seen for Asia and Europe, although forecasts were for larger reductions amid the narrowing in the Brent/Dubai spread. Given the recent volatility after the OPEC+ meeting, participants are on the lookout for an emergency OPEC+ meeting if this downward pressure continues. Meanwhile, Russian President Putin hit the wires today, and amongst other things, reiterated that Russia will not stick to oil and gas contracts if prices are capped. Over in Europe, EU is planning a EUR 200/MWh electricity price cap (vs German spot price of EUR 450/MWh) by non-gas power producers (wind, nuclear, coal), according to a draft proposal cited by FT. The document suggests a target of reducing consumption by 5% during peak pricing hours. The proposal to be discussed today ahead of Friday's energy meeting. European Commission President von der Leyen will be laying out the consumption target in her speech at 13:30BST. On that note, it’s also worth noting reports last month that suggested Munich is looking to ease off gas and lean more into oil and coal generators. Elsewhere, spot gold fluctuates on either side of USD 1,700/oz, driven largely by yields. Base metals meanwhile are mostly lower with upside hampered by disappointing Chinese trade data overnight – 3M LME copper remains above USD 7,500/t but off best levels at the time of writing. 

07 Sep 2022 - 10:25- Research Sheet- Source: Newsquawk

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