EUROPEAN COMMODITIES UPDATE: Pronounced two-way crude action while base metals languish

Analysis details (10:55)

• Crude benchmarks were softer this morning following the resumption of activity at Libya’s El Sharara & El Feel fields alongside mixed Chinese data; pronounced two-way action in the space has been seen around a since withdrawn Saudi update. Spot gold is more contained given the tentative tone and modest two-way USD action while base metals are dented on the Chinese data and subsequent cuts to the nation's FY23 growth view by numerous desks.


• Initially, WTI Aug’23 and Brent Sep’23 declined after pressure on the resumption of production at Libya’s El Sharara and El Feel sites following last week’s protest-related closures after the arrest of former Finance Minister Bumatari. Additional pressure emanated from the mixed China data further muddying the re-opening narrative and sparking a number of FY23 GDP forecast cuts to around the 5.0% mark from the 5.5-5.75% area; developments which have pressured crude given the demand-side implications of pressured Chinese economic performance.


• The crude space has experienced a marked bid following reporting that the Saudi Energy Ministry announced that Saudi will be extending its voluntary cut until the end of December 2024. The headline lifted WTI and Brent back into positive territory to highs of USD 76.09/bbl and USD 80.64/bbl respectively. 


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  However, we have since seen the entire Saudi-driven bid pare as Reuters has withdrawn the headline as it was published in error and was actually a repeat of an update from June 4th. On June 4th, Saudi announced an extension for July. Currently, benchmarks are trading around USD 74.21/bbl and USD 78.60/bbl respectively, posting losses of circa. USD 1.20/bbl and incrementally above the overnight trough.


• Moving to metals, spot gold is little changed and holding just above USD 1950/oz in tight USD 7/oz parameters as the risk tone remains a tentative one and the yellow metal is unable to derive any lasting direction from the morning’s modest USD action. Conversely, base metals are under marked pressure on the demand-side implications of the discussed Chinese data and subsequent downgrades to the FY growth view.


• Finally, the agricultural space has drawn focus this morning as the Black Sea grain deal lapses today as expected. Since then, Russia confirmed its conclusion but added that it will be providing an update on the situation in due course. Reminder, the likes of Rabobank last week said the deal had essentially already concluded and this morning's announcement was just a formality.

17 Jul 2023 - 10:52- MetalsData- Source: Newsquawk