EUROPEAN COMMODITIES UPDATE: Post-Fed risk aversion hits commodities as eyes turn to the BoE

Analysis details (09:15)

• WTI and Brent November futures are softer intraday following the hawkish Fed pause yesterday which ultimately led to risk assets being offered, with the kicker from the Fed being the “higher for longer” message, thus being demand-negative from the commodity complex. Nonetheless, Brent futures remain above USD 90/bbl (current low at USD 92.26/bbl) at levels just above USD 92.50/bbl, but some way off its recent +95/bbl levels, while WTI has retreated under USD 90/bbl (current low at USD 88.40/bbl) after reaching levels near USD 91/bbl in recent sessions. Elsewhere, source reports via Indian press suggested Saudi Arabia slashed the premium charged on exports to India after India began sourcing the bulk of its energy requirements from Russia. Saudi Arabia has now reduced the premium to USD 3.5/bbl from around USD 10/bbl in the past year, the source said. Meanwhile, it was reported yesterday that the US has backed away from some actions which were meant to halt Iran’s oil shipments following the prisoner exchange between Tehran and Washington, according the current and former US officials cited by WSJ. Ahead, eyes will remain on broader sentiment as a flurry of central banks release their announcements today, with a focus on what the BoE will opt for after yesterday’s UK inflation dragged market pricing to a near-50/50 split between a 25bps hike or a hold.


• Over in the gas markets, Dutch TTF has declined some 4% to levels closer to EUR 35/MWh amid broader sentiment and coupled with Australian LNG updates, whereby Offshore Alliance members at Woodside have overwhelmingly voted to endorse a deal with the company. As a reminder, on the 25th of August, Offshore Alliance members at Woodside Energy endorsed the in-principle agreement. At the time the release said, "The final draft of the Enterprise Agreement (EA) is currently being drafted by Woodside and the Offshore Alliance”. Meanwhile, members at Chevron will meet tonight to consider a recommendation made by the Fair Work Commission, according to a statement. This follows overnight reports that the Australian industrial arbitrator said Chevron and unions are on the precipice of achieving historical first enterprise agreements for LNG facilities and discussions have resulted in widespread agreement on the majority of provisions of proposals. Over in China, CNOOC research suggested China's 2023 natural gas demand seen +8% YY, and LNG imports are seen +10.9% YY.


• Over to metals, spot gold is flat on the session and attempts to recoup from the fallout of the Fed, which dragged the yellow metal from highs of USD 1,947.39/oz on Wednesday to a Thursday APAC trough at USD 1,924.26/oz – briefly dipping under its 200 DMA (today at USD 1,925.62/oz) after initially rising above its 100 DMA (today at USD 1,942.86/oz), with the 50 DMA in between at USD 1,930.56/oz. Base metals are softer across the board amid the risk aversion with Singapore iron ore slipping over 3%, whilst 3M LME copper accelerated losses shortly after the European equity cash open. The red metal is softer by almost 2% at the time of writing, with prices sliding from a high near USD 8,300/t towards a low under USD 8,200/t.

21 Sep 2023 - 09:15- Fixed IncomeResearch Sheet- Source: Newsquawk