EUROPEAN COMMODITIES UPDATE: Dollar downside helps crude and gold, but base metals remain subdued by sentiment

Analysis details (10:49)

The WTI and Brent July contracts are off worst levels but still post modest losses at the time of writing – with the former meandering around USD 110/bbl (vs low 108.61/bbl) and the latter back above USD 113/bbl (vs low USD 111.70/bbl). Price action overnight was a function of risk sentiment, but the recovery off APAC lows had no real drivers aside from a pullback in the Dollar. The fluidity in crude fundamentals remains with no real change thus far: the main demand-side factors being China’s COVID situation and US driving season, whilst the supply-side eyes the EU’s Russian oil embargo, OPEC spare capacity and potential reserves releases. The topic of spare capacity is being underplayed in markets - Saudi Aramco CEO said the world is operating with less than 2% of spare oil capacity and a return of jet fuel demand to its pre-COVID level will leave the world with almost no spare capacity, while he added they cannot speed up bringing new oil capacity on-stream and are sticking to their 2027 target. Meanwhile, there were also reports that the White House is considering environmental waivers for all blends of US gasoline to lower pump prices, according to Reuters sources. Aside from this, updates for the complex have been relatively quiet. Over to metals, spot gold drifted higher and above its 21 DMA (~USD 1,856/oz) as the Dollar took a hit from the central-bank induced EUR upside. LME base metals trade smostly lower as risk hits copper, aluminium, zinc, and nickel. Over to agriculture, reports earlier suggested India is to restrict sugar exports in a new risk to food prices globally, according to Bloomberg.

24 May 2022 - 10:48- MetalsResearch Sheet- Source: Newsquawk