EUROPEAN COMMODITIES UPDATE: Firm but relatively contained crude performance, awaiting updates to Ukraine-Russia talks

Analysis details (10:16)

WTI and Brent are firmer and remain towards the top-end of a limited circa USD 2.0/bbl range. Newsflow for the complex has been fairly limited and remains very much focused on the Ukraine-Russian situation as talks are set to resume on Monday. In terms of a weekend summary, the Russian Chief Negotiator said that a draft peace agreement is not ready – a view echoed by a SGH Macro note citing a conversation between Foreign Minister Lavrov and his Chinese counterpart. Notably, the piece says Russia is not ruling out RUB settlement for other commodities, a stance reinforced by Kremlin spokesperson Peskov. Elsewhere, physical gas flows on the Yamal-Europe pipeline at Mallnow, Germany have dropped to zero, according to Reuters, a reduction which also occurred last Tuesday. Note, we are yet to get an update in relation to the Nord Stream 1 (Russia-Germany) or Velke Kapusany (Ukraine-Slovakia) pipelines activity. Returning to the RUB settlement, while last Friday was the “deadline” for foreign buyers to pay in Rubles for gas, or face their contracts being cancelled, we have since seen spokesperson Peskov intimate that such payments will be made from the end of the second half of April, or early May. On this, the likes of Shell have cautioned that they are unable to use the RUB payment method with Gazprom due to sanctions.  Moving to bank commentary, Goldman Sachs has lifted its 2023 oil price forecast to USD 115/bbl (prev. 110/bbl), albeit, still sees end-2022 oil at USD 125/bbl. Switching to spot gold/silver, the two precious metals are modestly firmer this morning deriving impetus from the deterioration in equity sentiment seen since the European cash open; therefore, the metals are both at the top-end of their respective ranges. Technically, Futures Techs highlights significant resistance at USD 1967.20-90/oz in the yellow metal, looking towards USD 2000/oz and USD 2089.20/oz (ATH) in the bigger picture.

04 Apr 2022 - 10:15- EnergyResearch Sheet- Source: Newsquawk