EUROPEAN COMMODITIES UPDATE: Sentiment & USD provides support while Urals surpasses the G7 cap

Analysis details (10:55)

• Crude benchmarks are incrementally firmer but well within earlier ranges as Brent loses a little bit of its upward momentum after surpassing USD 80/bbl. Meanwhile, spot gold is inching higher as the USD remains downbeat but with upside once again capped by the broader tone.


• WTI and Brent are off of best levels but remain towards the upper-end of USD 75.68-76.16/bbl and USD 80.09-80.63/bbl respective parameters. The main scheduled update has been the IEA OMR, in which the agency cut their demand view but still look for oil demand to hit a record 102.1mln BPD in 2023 (June view 102.3mln). Within the release, lots of focus was given to China with the nation expected to account for 70% of oil demand gains though noting that the reopening has failed to extend beyond travel and services thus far. At 12:30BST/07:30ET OPEC will present their monthly update.


• Elsewhere, there has been lots of attention on Urals pricing in recent sessions given the moves in Brent, and overnight the Russian crude price surpassed the USD 60/bbl G7 cap by around USD 2-3/bbl according to calculations via Reuters. An increase which means that purchasers are now theoretically subject to penalty measures, including a loss of access to western insurance; albeit, the number of purchasers of Russian crude reliant on western insurance has dwindled.


• Moving to metals, spot gold is a touch firmer benefitting from the softer USD, but in a similar vein to recent sessions is unable to make too much ground as the broader risk tone caps upside. Additionally, the marked bid in fixed income may be diverting some flows that would otherwise go to the space. Elsewhere, base metals are benefitting from the above factors. On such metals, MUFG writes that the complex is likely to remain restrained until such a time as a material policy adjustment is seen, such as Chinese stimulus or major rate cuts. Factors they note could have a marked “motivation” on prices when they occur given inventories are at lows.

13 Jul 2023 - 10:50- MetalsGeopolitical- Source: Newsquawk