EUROPEAN COMMODITIES UPDATE: Oil trims earlier losses and metals edge higher as sentiment tilts positive in quiet trade

Analysis details (09:38)

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  WTI and Brent front-month futures eventually erased the losses seen overnight and climbed back into the green in early European trade. The initial downside overnight stemmed from the flimsy risk appetite at the time, with the complex on Friday notching its fourth straight week of declines. WTI fell back under USD 70/bbl overnight to a USD 69.41/bbl low (vs high 70.36/bbl) while its Brent counterpart dipped under USD 74/bbl to a USD 73.49/bbl intraday trough (vs high 74.45/bbl). “The market is struggling to shake off demand concerns, whilst uncertainty over the US debt ceiling will certainly not be helping”, according to ING. Desks also cite speculators reducing net long position in Brent over the last week, which now sees the smallest net longs since December. Over the gas markets, US Henry Hub and Dutch TTF see mild divergence, with the former firmer intraday and the latter softer. Weekend reports suggested that the G7 and EU are mulling a ban on imported gas via pipelines that Russia previously halted. Desks suggest that since this doesn’t lead to any changes in flows, it can be seen more as a symbolic move. Note: the G7 summit is due to kick off in Japan on Friday, and energy is poised to be debated by the group, but before that, traders will see the release of the EIA Monthly Oil Market Report and the Chinese April industrial data on Tuesday.


• Metals are largely benefiting from the softer Dollar. Spot gold edges higher and eyes its 10 DMA (USD 2,025.34/oz) after briefly dipping under its 21 DMA overnight at USD 2,008.06/oz. The yellow metal, at the time of writing, remains within Friday’s 2,000.96-2,022.58/oz parameter. Base metals are mostly firmer with 3M LME copper attempting a recovery from last week’s hefty losses, whilst iron ore rose back above USD 100/t in early trade on Monday, and Singapore iron ore rebounded over 3% on the day, as steel prices in China strengthened and iron ore inventories continued declining.

15 May 2023 - 09:40- Research Sheet- Source: Newsquawk