EUROPEAN COMMODITIES UPDATE: Sentiment takes over commodity price action ahead of US inflation, whilst the Black Sea grain deal sees conflicting reports

Analysis details (09:15)

• 
  WTI and Brent front-month futures are declining intraday after the contracts settled lower by USD 1.88/bbl and USD 2.01/bbl respectively. Oil prices tested YTD lows on Monday with global risk appetite impaired after the string of US bank failures rather than anything energy specific. Participants today will see the release of the OPEC Monthly Oil Market Report (MOMR), although this is likely to be stale and offer little for the oil market from an OPEC+ policy perspective. More importantly, traders will be eyeing the US CPI release at 12:30GMT/08:30EDT as this could shape the FOMC meeting next week, although uncertainty on Fed policy remains following the banking-sector developments. WTI has dipped under USD 73.00/bbl from a USD 74.90/bbl high, whilst Brent fell under USD 79.00/bbl from a USD 80.92/bbl peak.


• More divergence can be seen in the gas market, with US Henry Hub on a firmer footing above USD 2.6/MMBtu while Dutch TTF slides further under EUR 50/MWh and resides just above EUR 46.50/MWh at the time of writing. “Stronger wind power generation and forecasts for milder weather across parts of Northern Europe would have eased some concerns following recent energy disruptions in France. While EU gas storage is comfortable at more than 56% full, the gas market will likely remain extremely sensitive to any supply and demand developments.”, according to ING.


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  Metals are mixed. Precious metals saw a bout of haven flow yesterday, with spot gold rising some 2.5%, spot silver soaring over 6.0%, and spot palladium surging almost 7.5% - with participants today eyeing the US CPI metrics. “Gold will likely stay supported in the coming weeks amid fears of contagion risk”, according to the ING desk. Despite the Dollar strength, spot gold holds its head above the USD 1,900/oz mark after yesterday’s high was clocked in at USD 1,914.60/oz – with the February 3rd high at USD 1,918.59/oz ahead of the February 2nd peak at USD 1,959.74/oz. Conversely, base metals are pressured by the broader risk sentiment and firmer Dollar – 3M LME copper has fallen back under USD 8,900/t and oscillates around USD 8,850/t at the time of writing.


• Over in agricultural markets, the morning has seen mixed reporting of the Black Sea grain deal, as Russian and Ukrainian officials are mediated by Turkey and the UN ahead of the prior deal expiration on March 18th. Russian press reported that a deal has been reached, whilst Turkey poured cold water over reports and suggested talks are ongoing. Russia and Ukraine seem at odds over the length of the extension, with Ukraine opting for the original 120-day extension under the prior terms, whilst Russia is seeking a 60-day extension with the hope of fertiliser restrictions being lifted.

14 Mar 2023 - 09:15- Research Sheet- Source: Newsquawk