EUROPEAN COMMODITIES UPDATE: Oil falls to its levels since March, whilst gold holds onto yesterday’s gains above USD 2,000/oz

Analysis details (09:57)

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  WTI and Brent front-month futures have resumed downward price action despite a lack of fresh catalysts but amid the ongoing growth woes and ahead of another expected rate hike by the Federal Reserve later today. Crude prices settled around USD 4/bbl lower apiece yesterday, whilst the morning saw ICE Brent July fall under USD 75/bbl (vs high 75.58/bbl) – to lowest levels since March – while WTI June relinquished the USD 70/bbl handle (vs high 71.79/bbl). Analysts at ING confirm “There is little in the way of fresh fundamentals to justify the sell-off” but added that “investors seem to be getting increasingly nervous about the macro-outlook and its implications for oil demand”, with the desk citing speculators reducing their net longs on ICE Brent in recent weeks. Morgan Stanley this morning lowered its Brent forecast to USD 75/bbl by year-end and expects the 2024 oil market to be 500k BPD oversupplied. Desks also flag the possibility of the US administration starting to refill its SPR, although further weakness in the market could revive talks of potential additional OPEC+ cuts – while it’s worth noting a JMMC meeting is currently not scheduled for May. Ahead, participants will keep an eye on the EIA weekly inventories, although the larger-than-expected draw in the Private Inventories yesterday did little to stem the broader crude market weakness. Elsewhere, nat-gas prices are softer intraday on both sides of the pond in tandem with crude, with Dutch TTF around the EUR 36.50/MWh hour market, -2.5% intraday at the time of writing, whilst US Henry Hub resides around the USD 2.20/MMBtu mark.


• Metals are mixed. Spot gold holds onto yesterday’s advances above USD 2,000/oz – buoyed by a softer Dollar and the ongoing fears surrounding the US banking sector. The yellow metal resides near yesterday’s USD 2,019.45/oz within a USD 2,014.25-2,019.59/oz intraday band this far. Base metals meanwhile are indecisive as the sector weighs a softer Dollar, growth fears, and recovering Chinese demand. 3M LME copper trades on either side of USD 8,500/t in a tight USD 8,471-8,539/t range. Iron ore prices meanwhile traded softer around the USD 100/t mark overnight, with desks citing demand uncertainties and abundant supply – particularly from Australia, and following China’s recent jawboning of the material.

03 May 2023 - 10:02- Research Sheet- Source: Newsquawk