EUROPEAN COMMODITIES UPDATE: Metals succumb to the Dollar while crude trades choppily in a tight range

Crude Oil: WTI Dec -0.4%/Brent Jan -0.4%

• Subdued in choppy trade but within tight ranges amid a lack of macro catalysts but with eyes on the ever-evolving geopolitical landscape, whilst contracts settled with modest gains of some USD 0.3-0.4/bbl yesterday. Newsflow this morning has been quiet whilst no notable reaction was seen on the release of the IEA OMR.


• IEA OMR raised 2024 world oil demand growth forecast to 920k BPD (prev. 860k BPD); 2025 forecast at 990k BPD (prev. 1mln BPD). IEA said China is the main drag on global oil demand growth and Chinese demand contracted for a sixth straight month in Oct. This comes after the EIA STEO maintained its 2024 world oil demand forecast whilst marginally upgrading its 2025 forecast.


• Elsewhere, some focus on the weather near the Gulf of Mexico after NHC said the potential tropical cyclone in the area has become tropical depression, with life threatening flash flooding expected in Honduras later this week.


• In geopolitics, Israel is reportedly preparing a Lebanon ceasefire plan as a "gift" to US President-elect Trump, according to WaPo.


• Yesterday, the delayed private sector inventory data was mixed with a surprise draw in crude and a larger-than-expected build in distillates. Crude -0.8mln (exp. +0.1mln), Gasoline +0.3mln (exp. +0.6mln), Distillate +1.1mln (exp. +0.2mln), Cushing -1.9mln. Traders eye the DoEs (at 16:00GMT) for confirmation.


• WTI Dec resides in a current USD 67.92-68.60/bbl range while Brent Jan trades between USD 71.79-72.46/bbl.

Precious Metals: Gold -1.1%, Silver -2.0%, Palladium -0.4%

• Pressure seen across all precious metals as the Dollar continues to ramp higher as DXY rises further above 106.50 to levels closer to 107.00 (current range 106.45-106.88).


• ING on the USD "think this week’s price action has given us a taste of what’s to come in FX markets in this second Trump term, with brief dollar corrections (like after yesterday’s US CPI print) taken as an opportunity to enter structural USD longs at more attractive levels.", although the desk believes that risks could be skewed to the downside for the USD given stretched positioning.


• Eyes on Fed Chair Powell's speech later today which will include a Q&A section, in which he would be asked about yesterday's CPI metrics alongside potential implications of Trump policies.


• Spot gold fell from a USD 2,581.44/oz intraday high, through USD 2,550/oz, and its 100 DMA (~USD 2.542/oz) to a current low of USD 2,540.94/oz.

Base Metals: 3M LME Copper -1.3%

• Hefty losses across the board for base metals amid the ongoing USD strength and potential implications from protectionism under a Trump admin.


• China reportedly armed itself for a potential trade war with Trump as Beijing has enacted sweeping laws since the US President-elect’s first term that would allow it to retaliate if threatened, according to FT.


• Base metals continue to feel the hangover from underwhelming fiscal stimulus, whilst the Chinese housing market shrugged off recent measures.


• 3M LME copper continues to decline and breached USD 9,000/t to reach levels last seen in August, with the contract currently within a USD 8,876.50-9,034.50/t parameter. Iron ore futures hit a three-week low with desks citing ample supply and a softer outlook on steel.

14 Nov 2024 - 09:55- MetalsGeopolitical- Source: Newsquawk