EUROPEAN COMMODITIES UPDATE: Hawkish Central Bank action clips commodities

Analysis details (10:15)

• Another session of limited specific newsflow though price action is pronounced once again for the complex as crude slumps in tandem with broader market performance after the week’s key Central Bank activity concluded with a marked hawkish outing from the ECB.


• Currently, the crude benchmarks are posting losses in excess of 2.0%; though WTI still has around USD 4.0/bbl of downside required to bring it back to the WTD low of USD 70.25/bbl which printed on Monday.


• While specific developments have been light thus far, we remain attentive to the Russian Kremlin as it announces they are finalising the last details of the response to the oil price cap; additionally, for any developments on the gas cap, ahead of next week’s Energy Ministers gathering. On this, ICE has cautioned that it may remove the gas trading market from the Netherlands, in the scenario that the EU moves ahead with the gas cap, via FT citing a memo. A memo which reportedly warns the rapid imposition of a gas cap would put strain on the market and does not allow for testing of the resilience and risk management systems. Currently, Dutch TTF Jan’23 is lower by around 8% on the session, though seemingly found a floor around EUR 120/MWh.


• Moving to metals, spot gold and silver are experiencing some marked divergence with the yellow metal essentially unchanged, while silver has slipped by around 2% to the mid-USD 22/oz region. Action which occurs amidst the mentioned hawkish price action, with the metals unable to benefit from the slump in sentiment as rates climb and serve to offset any risk-related allure.

16 Dec 2022 - 10:05- Research Sheet- Source: Newsquawk