EUROPEAN COMMODITIES UPDATE: Industrial commodities see broad-based weakness on a firmer Dollar and China’s COVID woes

Analysis details (10:39)

WTI and Brent front-month futures are weaker intraday amid several factors including technicals, a firmer Dollar, alongside further bearish COVID-related headlines emanating from China. On the latter, the Chinese government’s mouthpiece, the People’s Daily, urged citizens to stick with the country’s zero-COVID strategy ahead of the CCP national congress over this coming weekend. Furthermore, China's Xi'an (population of 13mln) announced on Tuesday that it is to suspend onsite classes for some students amid the COVID-19 flare-ups, whilst other areas including culture venues, tourist attractions and cinemas also suspended services on Tuesday, according to Global Times. Aside from the COVID updates, the Brent Dec’22 contract declined from a USD 96.46/bbl intraday high, through its 200 DMA at USD 94.44/bbl, to a current trough of 94.08/bbl at the time of writing. Meanwhile, WTI Nov’22 fell from a USD 91.35/bbl peak, through USD 90/bbl and briefly dipped under USD 89/bbl as the European session went underway. Elsewhere from a supply perspective, it is worth keeping an eye on the developments in Iran, with reports that some workers at Iran's Abadan Refinery have joined the petrochemical workers’ strike in Asalouyeh off the coasts of the Persian Gulf, which began Monday morning, according to Iran International. However, newswires citing the Iranian State News agency have denied such reports. It was also reported via Reuters citing social media that workers at Abadan and Kangan oil refineries and the Bushehr Petrochemical Project had joined in on the protests over the woman who died whilst being held by Iranian authorities. Away from domestic unrest and onto geopolitics, missile strikes across Ukraine continue for a second day. Analysts at ING suggest “The oil market even seemed to shrug off Russia’s latest attacks on a number of Ukrainian cities, including Kyiv. This lack of reaction is likely due to the limited potential actions the West could take to further hit Russian oil exports.” Over to metals, spot gold is relatively flat despite the firmer Dollar, but remains under its 21 DMA (1,674/oz) as the clock ticks down to US CPI on Thursday. LME metals meanwhile are mostly lower with 3M copper softer on the day amid the stronger Buck and sullied risk tone and with the Chinese COVID restrictions an ongoing tail risk with the metal moving on either side of USD 7,500/t. 

11 Oct 2022 - 10:39- MetalsData- Source: Newsquawk