EUROPEAN COMMODITIES UPDATE: Industrial commodities gain but precious metals fail to benefit from the Dollar decline

Analysis details (09:55)

• WTI and Brent January futures are on the march higher in a continuation of the rebound seen on Friday, in which the contracts settled firmer by around USD 3/bbl apiece. On Friday, oil prices almost completely pared their massive sell-off from Thursday, with shorts covering for the week and expectations of an OPEC+ reaction. The momentum in the US session was exacerbated by headlines from Russia's Kremlin that Finland was making a "big mistake" and had chosen confrontation with Russia. The softening Dollar also helped. Add to that, on the OPEC front, there were source reports both in Reuters and the FT later in Friday's session that the group was considering deeper cuts, with the latter confirming the JPM call that up to an additional 1mln BPD could be on the table at the OPEC+ meeting on Nov 26th, underscoring the bid. Over the weekend, Energy Intel’s Bakr said she hasn’t heard of any ‘additional’ OPEC+ cuts being discussed at this time. 


• OPEC+ aside, geopolitics remains at the forefront of the energy complex, with Yemen’s Houthis saying they would target all ships owned and operated by Israeli companies or carrying the Israeli flag, while the Houthis later announced that they seized an Israeli ship and took it to a Yemeni port. Meanwhile, the Iranian Foreign Ministry said "Washington's obstruction of the ceasefire in Gaza leads to reactions from the resistance forces in the region", according to Al Jazeera. 


• WTI trades around USD 76.69/bbl at the time of writing (vs low 75.14/bbl) while Brent is back above USD 82/bbl in a USD 79.58-81.43/bbl intraday range.


• Over to metals, spot gold is relatively flat and is failing to benefit from the Dollar’s slide this morning, with the yellow metal around the middle of a USD 1,973.41-78.58/oz range at the time of writing, and within last week’s ranges. Spot silver meanwhile sits with losses of some 0.6% despite the broader Dollar weakness, with the metal re-eying its 200 DMA (23.29/oz) and 100 DMA (23.22/oz to the downside). 


• Base metals are mostly firmer with LME copper higher by some 1% intraday in a continuation of the performance seen in Shanghai, in which copper prices on the exchange hit two-month highs amid the softer Dollar and Chinese stimulus hopes – LME copper topped USD 8,350/t from a USD 8,281/t low. Similarly, iron ore prices in Asia saw a session of upside with Singapore iron climbing almost 2% and Dalian iron ore ending daytime trading at +0.5%, with some pointing to supply woes arising from Australia, whereby around 400 train drivers for BHP's Western Australian iron ore division will begin industrial action late this week. BHP's iron ore operations include five mines and four processing hubs that are joined by over 1,000 km of rail and port facilities.

20 Nov 2023 - 09:55- Research Sheet- Source: Newsquawk