EUROPEAN COMMODITIES UPDATE: Crude underpinned but metals see broader pressure from a resilient Dollar

Analysis details (09:50)

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  WTI and Brent July futures are modestly softer intraday but off worst levels after the benchmarks settled higher by some USD 0.40/bbl apiece yesterday. The complex seemingly found a floor as the PMIs underscored economic growth but elevated inflation in the last month in Europe, while the IMF also upped its UK GDP growth forecast for the year. Furthermore, all this coincided with an Energy panel at the Qatar Economic Forum, which involved the Saudi Energy Minister, Qatari Energy Minister, and the Iraqi Oil Minister, with the Saudi Energy Minister once again warning speculators to “watch out”. Saudi Energy Minister said OPEC+ must be vigilant and proactive – ahead of next week’s OPEC+ confab. The Iraqi Oil Minister meanwhile suggested Iraq is still waiting for a response from Turkey regarding the resumption of flows via the pipeline – which took some 450kBPD off the market following an arbitration ruling. Zooming out, desks suggested recent weakness in the complex could be emanating from hawkish Fed rhetoric – “the more the Fed increases rates, the more likely we are to see a hard landing, which would hit oil demand hard”, ING says, but the desk suggests traders may be reluctant to carry too much risk heading into the June 4th OPEC+ meeting as the group of producers have surprised in the past.


• Elsewhere, spot gold edges lower as the Dollar index ticks higher, with the yellow metal hovering just above the USD 1,950/oz and above Friday’s USD 1,954/oz trough, with participants looking ahead to a slew of central bank commentary, including potential commentary from Fed Chair Powell as he’s poised to speak at new Democrat coalition lunch on Tuesday, according to Axios. Base metals are softer across the board amid the stronger Dollar and with some citing downbeat sentiment on China following its latest string of sub-par data. 3M LME copper inches lower and approaches USD 8,000/t to the downside from a USD 8,193/t intraday high.

23 May 2023 - 09:57- Research Sheet- Source: Newsquawk