EUROPEAN COMMODITIES UPDATE: Flat trade across most commodities while base metals hold a softer bias

Analysis details (10:40)

• WTI Sep and Brent Oct futures are flat in early European trade with news flow also on the quiet side this morning, after settling lower yesterday by USD 1.58/bbl and USD 1.15/bbl respectively despite the softer-than-expected US CPI data. WTI trades on either side of USD 83/bbl and Brent on either side of 86.50/bbl, with the contracts looking for clear direction amidst summer conditions. The morning saw the release of the final of the three monthly oil market reports – the IEA maintained its 2023 demand growth forecast and lowered its 2024 forecast by 150k BPD. The agency said Chinese demand was also stronger than expected, reaching fresh highs despite persistent concerns over the health of the economy. IEA added that market balances are set to tighten further into the autumn as Saudi Arabia and Russia extend supply cuts at least through September, whilst additional supplies of heavy sour crude would allow refiners to boost activity and help ease product market tensions. But if the bloc’s current targets are maintained, oil inventories could draw by 2.2mln BPD in 3Q23 and 1.2mln BPD in the fourth quarter, with a risk of driving prices still higher. No noticeable move was seen on the release.


• Dutch TTF prices have receded from highs on the front-month contract, which trades with losses of around 1% at the time of writing, but looking further ahead, the Nov and Dec contracts remain firm above EUR 47.50/MWh and EUR 51.50/MWh respectively. ING provides some colour surrounding the gas market – “The European gas market remains in a comfortable situation with storage more than 88% full and it is clear that the region will hit its target of 90% by 1 November, well ahead of schedule. However, the market will still need to keep a close eye on how labour negotiations progress in Australia. The potential for prolonged industrial action at a number of Australian LNG facilities could put a little over 10% of global LNG supply at risk, and given Europe’s growing reliance on LNG, this would (as already seen in recent days) have an impact on European gas prices as Asian buyers compete more aggressively for alternative supply.”


• Over to metals, spot gold trades with a positive bias as the DXY remains subdued, with the yellow metal around the USD 1,915/oz mark in a narrow USD 10/oz range - with the 200 DMA moving above the psychological mark - at USD 1,900.20/oz. Base metals are subdued amid the ongoing concerns surrounding the Chinese with recent reports also suggesting monthly New Yuan loans falling to the lowest since 2009. 3M LME copper is back above USD 8,300/t after falling to a USD 8,289/t low from a USD 8,388/t intraday peak.

11 Aug 2023 - 10:40- MetalsData- Source: Newsquawk