EUROPEAN COMMODITIES UPDATE: Crude underpinned, base metals recover, and precious metals rise despite the firmer Dollar

Analysis details (10:22)

• WTI and Brent November futures are choppy in the European morning, with the complex swayed by mixed flash PMI data from France and Germany, with price action within yesterday’s range but underpinned by Russia’s gasoline and diesel export ban which came into effect yesterday. To recap, the French metrics all printed under forecasts while Germany modestly beat, with the EZ-wide metrics painting a mixed picture. “The numbers for PMI services in the Eurozone paint a grim picture, but it's not all doom and gloom. Sure, activity has been reduced once again and new incoming business has been shrinking for three months in a row… we expect the eurozone to enter a contraction in the third quarter. Our nowcast, which incorporates the PMI indices, points to a drop of 0.4% compared to the second quarter”, said the release. Elsewhere, HSBC joined its peers in raising its Brent forecasts – the bank expects oil demand to remain tight on the prolonged extension of Saudi voluntary cuts and assumes the cuts will stay in place until 2024. HSBC added that record Chinese oil demand should continue to support prices in the near term. WTI oscillates on either side of USD 90/bbl (USD 89.54-90.41/bbl range) while its Brent counterpart trades around the USD 93.50/bbl mark (USD 93.22-93.96/bbl range).


• Dutch TTF prices are on a firmer footing and eye EUR 40/MWh in the October contract despite Chevron’s Australia LNG workers suspending industrial action after reaching a deal. The upside for the complex could emanate from the Russian gasoline/diesel export ban, whilst recent reports also suggested firmer Chinese LNG demand. Furthermore, desks flag gas restocking ahead of winter. Analysts at BofA, on US nat gas, earlier this week suggested that milder winter could still drive gas stocks to record and push prices below USD 2/MMBtu in Q1 2024 in the first quarter of 2024.


• Metals are resilient to the firmer Dollar with spot gold rising from a 1,919.12/oz low, above its 200 DMA (1,925.29/oz) to a high just shy of its 50 DMA (1,929.58/oz). Base metals meanwhile have rebounded and trimmed a bulk of yesterday’s losses, with some citing optimism of a Chinese economic rebound amid recent stimulus measures, with desks also pointing to restocking ahead of China’s 8-day long holiday commencing next Friday. Dalian and Singapore iron ore futures rose over 2% apiece. Meanwhile, 3M LME copper also sees tailwinds and eyes USD 8,300/t to the upside after briefly dipping under USD 8,100/t during yesterday’s risk aversion.

22 Sep 2023 - 10:25- Research Sheet- Source: Newsquawk