EUROPEAN COMMODITIES UPDATE: Industrial commodities edge higher amid further Chinese property support, while precious metals see a mild divergence

Analysis details (09:53)

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  WTI and Brent futures front-month futures are trending upwards intraday despite a firmer dollar and the broader cautious/tentative feel to the markets ahead of Fed Chair Powell’s Jackson Hole speech. The complex was underpinned in APAC hours after the contracts settled modestly higher yesterday by around USD 0.15/bbl apiece despite the sullied sentiment at the time which ultimately saw a bid in the Dollar and a slide in stocks. Fresh fundamentals for the complex have been light, with this week’s slowing growth/economic contraction concerns still keeping crude on track for a week of modest losses. This morning saw the release of the German Ifo Survey which largely echoed the sentiment seen in the Flash PMI – “Today’s data pours more cold water on those hoping that the country’s economic weakness will be short-lived. The latest round of sentiment indicators suggests that the stagnation in the second quarter was not the end of contraction but rather a temporary respite. The new debate about the ‘sick of man Europe’ could finally increase the sense of urgency among decision-makers; more than a protracted period of de facto stagnation could”, says the desk at ING. That being said, the rise in interest rates is a main factor dampening demand for the complex – ECB sources via Reuters this morning suggested momentum is growing to pause ECB hikes as recession fears increase, although the debate is still open (full details on the Newsquawk headline feed). On the LNG front and over in Australia, the Offshore Alliance union members at Woodside Energy endorsed the in-principle agreement which was reached by the Co. and unions yesterday. Chevron meanwhile said it has not received any notice of intent to strike from Australian LNG unions after news yesterday that workers at Chevron's Australian downstream LNG facilities voted to allow unions to call strikes if needed, according to the union cited by Reuters; over 99% of the 433 workers that voted were in favour of taking action. WTI October is back above USD 80/bbl (vs low USD 78.85/bbl) while its Brent counterpart mounted USD 84/bbl (vs low USD 83.15/bbl). Dutch Sep’ TTF meanwhile rises 4.4% to session highs around EUR 33.50/MWh but is still some way off Tuesday’s peak at EUR 42.90/MWh.


• Over to metals, precious metals are mixed with spot gold subdued amid the recent Dollar strength, although the yellow metal is sandwiched between its 21 DMA (USD 1,918.69/oz) and 200 DMA (USD 1,909.92/oz) and within yesterday’s parameter awaiting Fed Chair Powell’s speech. Spot silver meanwhile sees a session of gains thus far after finding support at its 100 DMA (USD 23.97/oz), with prices closer to session highs. Industrial metals meanwhile are firmer with the aid of further Chinese support for the property sector. Reports this morning suggested China is issuing nationwide guidance on the easing of mortgage rules, and plans to cut stamp duty on domestic stock trading by up to 50%, via Reuters citing sources. 3M LME copper rose from around USD 8,350/t at the initial headline, to a session high of USD 8,428/t at the time of writing, whilst Dalian iron ore reversed earlier losses to trade with firm gains.

25 Aug 2023 - 09:55- Research Sheet- Source: Newsquawk