EUROPEAN COMMODITIES UPDATE: Quiet trade across commodities as markets brace for Powell

Analysis details (10:07)

• 
  WTI and Brent August futures trade modestly firmer in the European morning after settling slightly lower yesterday as Chinese growth concerns weighed while the Dollar strength post blowout housing starts data saw WTI fall sub-USD 70/bbl before paring throughout the remainder of the session, particularly into settlement. The complex continued ticking higher overnight as futures attempted to nurse recent losses, although the mostly subdued APAC tone kept the upside capped. The European session thus far has seen sideways trade in crude futures, with gains hampered by the hotter-than-expected UK CPI data ahead of tomorrow’s BoE announcement (full Newsquawk preview available in the research suite). In terms of upcoming scheduled risk events, participants will be keeping an eye on Fed Chair Powell’s first day of testimonies – today at the House Financial Services Committee. From a data perspective, the weekly Private inventory data will come out later today on account of Monday’s US Juneteenth holiday. WTI and Brent reside around USD 71.70/bbl (vs low 70.80/bbl) and USD 76.32/bbl (vs low 75.50/bbl). Analysts at MUFG suggest that since their bullish oil call at the beginning of the year, “fundamentals have been softer-than-expected in H1 2023 and prospects for H2 2023 tightening is starting to slip” – with the firm joining the growing list of desks downgrading their oil price forecasts – now expecting Brent to average USD 81/bbl this year (vs previous view of USD 88/bbl). The firm cites higher-than-expected supply from sanctioned OPEC+ countries propping up the supply side of the equation.


• Spot gold meanwhile consolidates ahead of Fed Chair Powell’s testimony and after the yellow metal’s heft losses yesterday after it breached the 100 DMA to the downside – which today stands at USD 1,942.23/oz. Base metals are mixed amid the indecisive tone in the market, with copper prices relatively contained within a USD 8,536.50-8,608.50/t intraday band, with APAC weakness emanating from a subdued risk appetite overnight. Furthermore, recent reports highlighted that Indonesia will stop exporting copper concentrates as soon as Freeport Indonesia and Amman Mineral International finish building smelters next year.

21 Jun 2023 - 10:08- Fixed IncomeEU Research- Source: Newsquawk