EUROPEAN COMMODITIES UPDATE: Modest gains as the USD slips but with tentative pre-CPI trade capping upside

Analysis details (10:40)

• Crude benchmarks are modestly firmer in-fitting with US equity futures ahead of the regions upcoming inflation print. In metals, spot gold is incrementally firmer and deriving support from the ongoing USD slump but with upside capped on the constructive risk tone, with base metals portraying similar action.


• WTI and Brent are towards the upper-end of narrow USD 74.67-75.25/bbl and USD 79.21-79.79/bbl respective parameters with specific fundamentals light and the gains seemingly a function of broader risk appetite and USD downside. But, as above, with upside capped for the complex generally in tentative pre-CPI trade. Further to Tuesday’s update, ArgusMedia’s latest data shows that Russian Urals pricing has lifted to USD 59.98/bbl at Novorossiisk bringing it within touching distance of the G7’s USD 60/bbl price cap; if surpassed, then any purchasers at that point would potentially be subject to penalty measures including a loss of insurance services.


• Ahead, the weekly EIA crude data is due and expected to show a headline build of 1.35M though the internals are seen drawing modestly. For comparison, the Private Inventory report included a more sizeable headline build of 3mln with the internals also bearish aside from the Cushing print.


• Note, it has been another session of substantial geopolitical headlines as the NATO summit continues, but thus far they are broadly as expected and have added little to the known narrative.


• Moving to metals, spot gold is a touch firmer though is held by narrow USD 1932-1940 boundaries thus far with the yellow metal torn between the softer USD and constructive European sentiment while US trade remains very tentative at this point. Base metals are in-fitting, but with magnitudes slightly more pronounced as the complex pares back downside from Tuesday.

12 Jul 2023 - 10:31- Research Sheet- Source: Newsquawk