EUROPEAN COMMODITIES UPDATE: Further erosion to geopolitical premia for crude with Ukraine-Russia talks underway

Analysis details (10:33)

WTI and Brent began the session on the front-foot in a recovery from the pressure seen yesterday amid a waning in geopolitical premia amid reports on potential negotiating progress. Updates, aside from the commencement of talks in Turkey, had been limited for much of the European morning. However, in short-order there were numerous headlines from both Ukraine and Russia; specifically, Ukrainian negotiator Podoliak noted that a ceasefire is being discussed, a remark that sparked modest risk-on action. Additionally, a top Russian negotiator said there will be a press conference following the discussions in several hours. Finally, Russian Defence Minister Shoigu reiterated language from last week around the main task of the first phase being complete and that their focus is now on the liberation of Donbass – note, in-spite of last week’s updates, on Monday reports cited by journalists indicated that Russia was still attacking key areas around Kyiv. Overall, these updates have been taken as a positive and as such the initial recovery in crude benchmarks has been eroded and we are modestly negative once more. Albeit, still someway from the overnight low. Currently, WTI and Brent are pivoting USD 106.25/bbl and USD 113.20/bbl respectively. Elsewhere, ahead of Thursday’s OPEC+ gathering , the Saudi and UAE Energy Ministers spoke on a panel but didn’t add too much to the situation aside from Saudi noting it will have 2mln BPD of excess capacity given higher production and its energy mix. Moving to metals, spot gold/silver are pressured once more and again this price action is generally speaking in-fitting with other havens. Price action that was in fitting before, but has been exacerbated by, the risk-on move following the aforementioned geopolitical commentary. Technically, the yellow metal is nearing touted support at USD 1906/oz ahead of 1900/oz itself.

29 Mar 2022 - 10:32- EnergyResearch Sheet- Source: Newsquawk