EUROPEAN COMMODITIES UPDATE: Industrials welcome China’s Caixin PMI and risk appetite in Europe, but gold remains pressured by the stronger Dollar

Analysis details (09:27)

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  WTI July and Brent August futures are tilting firmer intraday but off best levels as the crude complex attempts to regain some composure in the run-up to the OPEC+ confab this Sunday. WTI resides around USD 68.30/bbl (USD 67.50-68.84/bbl range) while Brent trades just under USD 73/bbl (USD 72.14-73.43/bbl range) at the time of writing. The modest upside in the complex comes as Chinese Caixin Manufacturing PMI was surprisingly revised into expansion territory, while European markets remain “risk-on” despite the Dollar appreciating throughout the session. That being said, the upside is capped by the large surprise build in Private Inventories (Crude +5.2mln vs exp. -1.4mln), with participants on the lookout for confirmation from today's EIA metrics (delayed due to the Memorial Day holiday on Monday). The modest upside also comes following days of back-to-back losses in the oil prices, with the benchmarks settling lower by over USD 1/bbl yesterday.


• Back to OPEC+, it is currently unclear which path the alliance of oil producers will opt for at the upcoming weekend meeting, although desks are seemingly in consensus that the group will keep production steady but will stress flexibility. Analysts however are also in unison in assigning non-zero chances of further production cuts, mainly given the de-facto head, Saudi Energy Minister's recent warning to speculators and the fall in prices since the group's surprise, and coordinated, voluntary curb announcement in April.


• Over to metals, spot gold is on a softer footing amid the firmer Dollar, with the yellow metal reapproaching yesterday’s USD 1,953/oz low but remains some way off Tuesday’s USD 1,932.11/oz intraday trough – awaiting the US ISM data, and then ADP ahead of tomorrow’s NFP. Base metals meanwhile are mostly firmer as the aforementioned upbeat Chinese Manufacturing data injected some demand optimism in industrials, despite the Caixin metrics diverting from the official NBS PMI figures earlier in the week. 3M LME copper briefly topped the USD 8,200/t mark before pulling back, with the upside hindered by the stronger Greenback.

01 Jun 2023 - 09:35- - Source: Newsquawk