EUROPEAN COMMODITIES UPDATE: Industrial commodities see modest gains following a last-minute boost to Chinese sentiment; gold remains under USD 1,900/oz.

Analysis details (10:31)

• WTI and Brent front-month futures tilted higher this morning after settling lower by USD 1.61/bbl and USD 1.44/bbl respectively following the risk-aversion across the market before and after the FOMC minutes. Overnight, oil saw a session of consolidation as participants digested the FOMC minutes which kept the door open for future hikes. Thereafter, gains were seen as European players entered the fray, with newsflow light but with sentiment in China seeing a noticeable pick-up towards the final hour of Shanghai trade – with the broader market mood being lifted in tandem at the time. In terms of oil market commentary, several desks have flagged the constructive fundamentals for the oil market despite concerns. ING states “oil fundamentals remain largely constructive as continued OPEC+ supply cuts should ensure that we see sizeable inventory draws for the remainder of the year.” Meanwhile,  UBS said it does not expect recent price falls to persist in light of the oil market’s firming fundamentals as the Swiss bank upgrades its end-December WTI and Brent forecasts to USD 91/bbl (from USD 85/bbl) and USD 95/bbl (from USD 90/bbl) respectively. Aside from that, crude newsflow has been light, but traders are keeping one eye on US hurricane season, with a tropical storm watch in effect for the US west coast across the southern portion of the Baja California Sur – with the trajectory heading straight to the Port of Los Angeles.


• Dutch TTF is slightly firmer on the day to the tune of 1.5% in the front month with CNBC TV citing their sources this morning suggesting Woodside Energy (WDS AT) workers will reportedly vote tonight on industrial action at LNG platforms, while negotiations are set to continue next week.


• Over to metals, spot gold is flat intraday under the USD 1,900/oz mark after relinquishing the level amid the recent Dollar strength, with the yellow metal pulling further away from its 200 DMA (1,905.86/oz) as it eyes the June 29th low of USD 1,893.07/oz. Base metals are holding modest gains with some impetus seen from the aforementioned revivals of Chinese sentiment towards the end of their trading day. 3M LME copper hovers some USD 100 above its intraday low and not far off session highs in a USD 8,123-8,224/t intraday range, whilst iron ore rose over 4%, with some suggesting the strength in iron ore is due to uncertainty over the output cuts by Chinese steel mills, with only one out of seven survey steel mills in China reserving notice to curb production, according to reports citing Mysteel.

17 Aug 2023 - 10:34- Research Sheet- Source: Newsquawk