EUROPEAN COMMODITIES UPDATE: Energy surges ahead with the Nord Stream curtailment looming, XAU USD-driven

Analysis details (10:50)

The session’s headline price action has seen Dutch TTF Aug’22 lift to a peak within touching distance of EUR 200 (195 best thus far), compared to initial lows of 177.50; for reference, the 2022 peak thus far is EUR 200.90. From a fundamental perspective, there hasn’t been any overtly fresh driver behind the morning’s European performance for TTF, as the Nord Stream 1 related commentary echoes yesterday’s update where flows will be cut to 20% from July 27th. However, the EU’s Emergency Energy Summit has gotten underway (press conferences at 12:30BST and 15:00BST) and the arrivals to the event laid bare the known divisions between member states and thus the hurdles the EU will have to navigate to attain a workable agreement. For instance, Poland made explicitly clear that they have no need to limit gas usage. Going into the event, ambassadors from various nations have been pushing for exemptions, loopholes and other concession to the proposed plan to cut gas consumption by 15% from August. Nonetheless, the EU Energy Chief Simson continues to expect a deal to be reached today. Crossing to crude, benchmarks are bid and drawing impetus from the above factors and divisions, though the magnitude of the move is more modest in nature and the complex remains well with recent sessions ranges; with, for instance, WTI still sub USD 100/bbl. In the session ahead, the Private Inventory report is due which is expected to print a headline draw of just over 1mln. Finally, spot gold is little changed overall and has largely been dictated by movement in the USD, which saw the yellow metal dip into incremental negative territory as the DXY lifted to a fresh session peak. Conversely, base metals continue to post strong gains and has LME Copper firmer by around USD 200 thus far; price action that is a continuation of APAC performance and is yet to be substantially impact by the mentioned USD move.

26 Jul 2022 - 10:50- MetalsResearch Sheet- Source: Newsquawk