EUROPEAN COMMODITIES UPDATE: Divergence across commodities as markets gear up for the Fed

Analysis details (09:05)

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  WTI and Brent May futures are softer intraday but off session lows, after both contracts settled higher by over USD 1.5/bbl apiece yesterday, after comments from US Treasury Secretary Janet Yellen who indicated the government's willingness to protect depositors in small US banks. Thereafter, the Private Inventory report proved mostly bearish for the market, with a surprise build in the headline crude (+3.3mln vs exp. -1.6mln), and provided some downward pressure for prices. Markets are awaiting the Federal Reserve's decision and presser, with expectations largely tilting towards a 25bps increase, although recent financial stability concerns have raised some anxieties surrounding the health of the banking sector (Full Newsquawk preview available in the Research Suite). WTI trades around USD 69.30/bbl (vs low 68.89/bbl) while its Brent counterpart oscillates around USD 75/bbl (vs low 74.50/bbl).


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  Gas markets are lower intraday in Europe and the US. Analysts at ING suggest “There are signs that the European gasoil market is tightening.” The desk highlights that the prompt ICE gasoil timespread is trading in backwardation - indicating a tightening market - mainly due to lower runs from French refiners affected by continued strike action, leading to halted or reduced operations at refineries.


• Over to metals, spot gold trades flat around the middle of a USD 1,934.34-46.30/oz range awaiting the FOMC. Base metals are mostly firmer with 3M LME copper back on a USD 8,800/t handle following the optimism seen in APAC markets. In terms of other industrial meals, JPMorgan sees iron ore at USD 100/t in Q4 2023 (vs current spot USD 120/t), whilst Chinese customs data reveals a 94% increase in refined aluminium imports from Russia between March 2022 and February 2023, reaching over 538k tonnes, as some Western buyers rejected Russian supplies in their contracts.

22 Mar 2023 - 09:05- MetalsEconomic Commentary- Source: Newsquawk