EUROPEAN COMMODITIES UPDATE: Risk pressures crude and industrial metals while gold tackles opposing forces

Analysis details (09:46)

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  WTI and Brent May futures trade on a softer footing as the defensive risk mood emanating from banking-sector woes weighs on the sector. WTI and Brent fell back under USD 70/bbl and USD 76/bbl respectively after climbing in APAC trade, albeit within yesterday’s ranges. Prices will likely continue to track sentiment in the near future with the absence of any scheduled OPEC+ confabs until June. Although some traders expect OPEC+ to step in to provide a floor under prices, EnergyIntel yesterday suggested there are currently no plans for the group to call an emergency meeting.


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  Dutch TTF and US Henry Hub futures show slight divergence with the former under EUR 43/MWh and the latter not far above USD 2.15/MMBtu. BNP Paribas, in a note dated 23rd March, highlights that Europe's gas markets require substantial flexibility to manage seasonal demand fluctuations, but traditional flexibility sources are currently compromised. This limited flexibility increases the EU gas market's sensitivity to supply-demand balance shifts and sentiment, the desk said, leading to continued price volatility even in a bearish market. The bank anticipates risks to balances will resurface in the summer and winter, causing price levels and volatility to increase toward winter.


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  Precious metals are underpinned, and industrial metals see broad pressure amid the risk-off sentiment. Spot gold trades flat/lower intraday as gains are capped by the firmer Dollar and losses cushioned by the flight to quality, with the yellow metal meandering around USD 1,990/oz in a USD 1.981-95/oz current range. UBS maintains a positive outlook on gold and targets USD 2,050/oz by the end of the year. Elsewhere, 3M LME copper meanwhile fell back under USD 9,000/t from a USD 9,095.50/t peak as risk aversion and a firmer Dollar weigh on the red metal.

24 Mar 2023 - 09:50- MetalsEU Research- Source: Newsquawk