EUROPEAN COMMODITIES UPDATE: Crude underpinned by bullish fundamentals while base metals feel the pressure of a firm Dollar and Chinese property woes

Analysis details (10:06)

• WTI and Brent November futures are firmer intraday despite the firmer Dollar, downbeat mood across stocks, and the Chinese property woes overnight. Desks suggest oil market fundamentals remain strong despite last week’s hawkishly perceived FOMC meeting, with Russia’s recent export ban on diesel and gasoline somewhat offsetting the bearish sentiment. JPMorgan’s head of EMEA energy equity research on Friday suggested the Brent prices could continue upwards to USD 150/bbl by 2026 amid a concoction of factors including capacity shocks, an energy super cycle, and efforts to shift away from fossil fuels. WTI trades just above USD 90.50/bbl at the time of writing (in a 90.08-83/bbl range) while Brent briefly reclaimed USD 94/bbl status (in a USD 93.38-94.25/bbl range). Fresh fundamentals for the complex have been light this morning, although the Saudi Foreign Minister over the weekend said the kingdom is keen to maintain stability, reliability, sustainability and security of oil markets, according to Reuters. Sticking with energy, Dutch TTF prices are on the rise this morning despite bearish fundamentals at face value, with the Australian LNG strikes averted and with Norway also ramping up gas output. There is no obvious reason for the surge in TTF prices which has also been gradual in nature.


• Over to metals, spot gold and silver reversed the earlier upside as the DXY continues gaining ground, spot gold briefly topped its 200 DMA (1,925.93/oz) but remains within Friday’s USD 1,918.95-28.89/oz range, while spot silver briefly rose above its 50 DMA at USD 23.63/oz before reversing back to session lows – again within Friday’s USD 23.36-7720/oz range. Base metals are lower across the board, with the initial downside emanating from the losses across Chinese property names overnight, while the deterioration in sentiment in the European morning keeps industrial metals under pressure. Iron ore prices hit a two-week low with participants citing weak demand and potential steel output curbs during winter in China, as pre-holiday restocking came to an end. Singapore iron ore fell over 4% whilst Dalian iron ore fell over 2%. Over in European trade, 3M LME posts losses deeper than 1% as prices fell back under USD 8,200/t and now trade closer to USD 8,100/t.

25 Sep 2023 - 10:09- MetalsResearch Sheet- Source: Newsquawk