EUROPEAN COMMODITIES UPDATE: Precious metals march higher on potential haven flows while crude wanes from best levels as Russia and Saudi discuss the oil market

Analysis details (10:13)

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  WTI and Brent front-month futures are now softer intraday after trading with mild gains throughout APAC hours after both contracts settled lowed by USD 0.41/bbl and USD 0.50/bbl yesterday. Overall trade yesterday was characterised as choppy, with price taking some pause after Monday's sharp move higher, whilst China stimulus reports provided a floor. Global energy supply risk was in focus again, but this time in Northern Europe after reports that a gas pipeline leak in Finland had been the result of sabotage, saw Dutch TTF prices surge. Meanwhile, in Venezuela, Bloomberg reports that the country is nearing a sanctions relief deal with the US, adding to similar Reuters reports on Monday, which could pave the way for higher oil production and exports. In terms of newsflow this morning, Russian Deputy PM Novak hit the wires today and suggested that the Israeli-Palestinian conflict could affect the oil market. Analysts at ING posit that “If the conflict is contained to Israel and Hamas we would expect the current risk premium to slowly erode. However, there is still a risk that this escalates, particularly if there is any Iranian involvement. Under this scenario, stronger enforcement of US sanctions on Iranian oil would tighten up the oil market through 2024.” Russian Deputy PM Novak also said Russia and Saudi Arabia are to discuss the oil market today before stating that Russia is ready to raise oil product shipments to Saudi Arabia. WTI Nov resides just under USD 86/bbl (in a USD 85.81-86.51/bbl range) while Brent Dec sits just above USD 87.50/bbl (in a USD 87.57-88.26/bbl parameter). As a reminder, the weekly Private Inventory report will be released today on account of US Columbus Day on Monday, with the EIA report due tomorrow at 16:00 BST.


• Over to gas markets, Nov Dutch TTF is taking a breather and trades softer around 4% at EUR 47.50/MWh at the time of writing, after rising some 12% yesterday to levels a whisker away from EUR 50/MWh. The main driver of prices has been the Finnish government treating the Balticconnector gas pipeline leak found over the weekend as an act of sabotage, with the Estonian Defence Minister this morning suggesting heavy force has been used, with the concrete around the pipeline as well as the pipeline itself damaged. Elsewhere, Chevron and unions representing workers at its two Australian liquefied natural gas facilities reportedly met for talks this morning after the latter threatened to revive strike action – nothing has been released on this front yet. Furthermore, QatarEnergy signed a 27-year LNG supply deal with France to supply up to 3.5 MTPA to France from Qatar.


• Spot gold meanwhile is on the march higher, potentially amid haven flows as the Israeli war rages on with Lebanon and Syria also said to be involved, with the index hitting session highs despite stable action across the Dollar and Bonds at the time of writing. XAU topped yesterday’s USD 1,865.50/oz high and grinds higher to a current intraday peak at USD 1,870.29/oz, with the 21 DMA seen at USD 1,88075/oz today. Spot silver is also posting gains in excess of 1% and trades north of USD 22/oz. Elsewhere, base metals are mostly flat/modestly firmer with the complex underpinned amid stimulus hopes with China to boost financial assistance to expand consumption and is weighing new stimulus, as well as a higher budget deficit this year to meet its growth target – 3M LME copper holds north of USD 8,000/t.

11 Oct 2023 - 10:16- Research Sheet- Source: Newsquawk