EUROPEAN COMMODITIES UPDATE: Russian rhetoric lifts crude and spot gold modestly

Analysis details (10:45)

• A particularly quiet session for pertinent newsflow, as we are still awaiting an update on the JCPOA draft and as the commodity-specific scheduled is sparse. However, the limited updates have been pertinent in nature. In particular, an initial remark from the Russian Defence Ministry that Ukraine is preparing a 'provocation' at the Zaporizhzhia nuclear plant on August 19th, which would coincide with the planned visit of Turkish President Erdogan to Lviv for a meeting with Ukraine’s Zelensky regarding agriculture. Remarks that were followed by the Ministry adding the plant could shut down if shelling continues and the backup systems have been damaged. Furthermore, adding that if an accident occurred radioactive substances would cover Poland, Germany and Slovakia. Commentary which sparked upside in the crude complex, lifting the benchmarks to fresh session highs; specifically, WTI Sep’22 lifted from USD 88.40/bbl to USD 89.56/bbl and Brent Oct’22 from USD 94.20/bbl to USD 95.44/bbl over around a 25-minute period. Note, this update occurred just prior to remarks from China’s President Xi that they will persist with opening up the domestic economy – while familiar, this language likely served as another bullish factor for the complex, in otherwise quiet newsflow.


• For reference, UBS reiterates its belief that the recent declines in price do not fully account for global supply constraints and forecast Brent rebounding to USD 125/bbl by end-2022 and remaining at such levels through mid-2023.


• Amidst the above price action, spot gold experienced a marginal haven bid bringing the yellow metal to an incremental new session peak of USD 1767/oz and eclipsing the 21-DMA at USD 1764/oz. The broader metal space is mixed and features essentially unchanged action for Aluminium, after Wednesday’s noted rally, while LME Copper has climbed back towards a test of the USD 8k handle. Elsewhere, Citi has lifted its 3-month price point for Zine by USD 600/T to USD 3.8k/T and the 6-12month view by USD 100/T. Writing that the market is to tighten further following the closure of the Budel smelter.

18 Aug 2022 - 10:45- MetalsEU Research- Source: Newsquawk