EUROPEAN COMMODITIES UPDATE: Crude wanes and gold moves sideways but iron cheers China’s return

Analysis details (10:55)

WTI and Brent front-month futures are softer on the day – potentially a function of the downward tilting sentiment at the start of the week. However, in the bigger picture prices remain elevated with the Brent Apr’ contract testing USD 94/bbl to the upside overnight. Developments in terms of crude fundamentals have been abundant: the Iranian nuclear deal is seemingly making some progress with talks set to resume tomorrow after the Biden Admin on Friday restored sanctions waivers to Iran to allow international nuclear cooperation projects. If talks are successful, the timeline hinted by US diplomats and cited by Argus would suggest Iran's full reintegration in global oil markets by late 2022 or early 2023. However, Iran suggests that some sanctions-related demands are yet to be met. Over in Russia, the Kremlin said there has been nothing new in recent days on the Russian security guarantees – and added that the West prefers not to mention this topic. The Kremlin has previously highlighted that Russia’s stance will be determined by security guarantees. French President Macron is meeting Russian President Putin today, but Kremlin has downplayed expectations of diplomacy. Elsewhere, the Libyan oil minister stated Libya’s oil export terminals have reopened with oil production of 1.17mln BPD. Libya has previously noted they would not abide by OPEC+ quotas unless they were sustaining production above 1.7mln BPD. Elsewhere, markets may be seeing some unwind of the Texas freeze premium with NatGas on a softer footing and the Brent-WTI arb rewidening to around USD 1.30 vs USD 0.50 on Friday. Turning to metals, spot gold is sandwiched between its 21 DMA (1,817/oz) and 200 DMA (1,806/oz) with price action horizontal. Overnight, Chinese steel and iron ore futures rose with traders citing healthy demand upon China’s return from holiday. Meanwhile, Shanghai aluminium prices hit a 4-month high amid supply woes – with Russia holding around 25% of market share according to Rabobank.

07 Feb 2022 - 10:54- Research Sheet- Source: Newsquawk