EUROPEAN COMMODITIES UPDATE: Crude upside capped whilst precious metals recover and wheat soars

Analysis details (10:41)

WTI and Brent front month futures trade with modest losses amid the poor lockdown-stricken Chinese data overnight, but prices found a bottom as China unveiled its lockdown easing plans – in turn soothing some demand woes. On the topic of slowdowns, the European Commission cut its EZ 2022 GDP growth forecast to 2.7% from the 4.0% projected in February. Elsewhere, European Foreign Ministers are meeting today to hash out the sixth Russian sanctions package. However, it looks increasingly likely that a deal on the oil-embargo section will not be reached, as sticking points remain between member states. Meanwhile, several Middle-Eastern energy ministers hit the wires but failed to add much by way of fresh commentary – aside from Baharain’s Energy Minister suggesting OPEC+ will stick to its pact. Turning to refined fuels, China is to increase fuel prices from Tuesday, according to the NDRC; gasoline by CNY 285/t and diesel by CNY 270/t. Meanwhile, the US is gearing up for the summer driving season – “The continuous inventory withdrawal over the past few weeks has pushed US gasoline stocks to levels significantly below the five-year average at this point in the season and reflects acute supply tightness. Refineries increased operating rates last week to improve supply; however, a shortfall persists” ING writes. WTI Jun trades just under USD 110/bbl (108.11-111.71 range) whilst Brent Jul resides around USD 110.50/bbl (108.84-112.70 range). Moving to metals, precious metals experienced some early weakness in a move which coincided with a sudden surge in bond yields at the time. Spot gold fell to a USD 1,787/oz low from just under USD 1,810/oz before meandering around USD 1,800/oz. Base metals overnight saw support from China’s lockdown easing plans. However, the APAC sessions focus turned to the agricultural market, with CBOT wheat soaring around 5% after India announced it would restrict wheat exports from the country with immediate effect due to food security.

16 May 2022 - 10:40- MetalsResearch Sheet- Source: Newsquawk