EUROPEAN COMMODITIES UPDATE: Silver slips back, gold holds gains and crude stabilises after yesterday's losses

Analysis details (09:53)

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  WTI and Brent October futures were subdued for most of the morning before turning flat in recent trade, following a relatively choppy APAC session, and after the contracts settled lower by USD 0.75/bbl and USD 0.82/bbl yesterday. Pressure yesterday was largely a function of supply and demand headwinds. To recap, on the demand side, August flash PMIs flagged slowing growth and sticky inflation across some major economies, while on the supply side, the Turkish Energy Minister said an agreement has been reached to resume the flow of oil from the Iraqi-Turkish pipeline. Back to today’s session, the complex is capped by the firmer Dollar and hindered to an extent by price action in the nat gas complex. Dutch TTF prices plunged 18% at the open amid reports Australia’s Woodside Energy reached an agreement in principle with unions on Thursday. Workers are meeting to decide on whether to ratify the deal, according to a union spokesperson. The meeting between Woodside and unions on Wednesday lasted 15 hours. Members of the Woodside North West Shelf facility are set to vote on the in-principle agreement today at 12:30 BST, according to Reuters. Alongside this, workers at Chevron's Australian LNG facilities have voted to allow unions to call strikes if needed, according to the union cited by Reuters, with the Wheatstone platform set to vote on August 28th. That being said, if Woodside developments solidify, Credit Suisse energy analyst Kavonic said there was still a risk of strikes at Chevron's facilities, but it was unlikely to significantly disrupt supplies (full Newsquawk analysis available here). Elsewhere for the energy complex, the BRICS bloc (consisting of Brazil, Russia, India, China, and South Africa), invited six new members – Saudi Arabia, UAE, Iran, Egypt, Argentina, and Ethiopia – with the former three being large Middle Eastern energy producers.


• Crude futures saw a lift higher in conjunction with the Chevron vote headlines. Amid this latest development, WTI has moved back to session highs around USD 78.85/bbl (vs low USD 78.22/bbl) after falling to a USD 77.62/bbl low, while its Brent counterpart trades just above USD 83/bbl (vs low 82.57/bbl) after dipping to a USD 81.94/bbl low yesterday. Dutch TTF meanwhile has trimmed earlier losses and is back on a handle north of EUR 32/MWh, but remains softer by 12.6% intraday at the time of writing after dropping 18% at the open to a low of around EUR 29.50/MWh.


• Over to metals, spot gold is mildly firmer despite the stronger Dollar and relatively flat bond price action, with the yellow metal rising back above its 21 DMA (USD 1,920/oz) and eyes its 50 DMA (USD 1,931.35/oz) ahead of its 100 DMA (USD 1,958.73/oz). Spot silver is pulling back after yesterday’s impressive rise, with the next downside level the 100 DMA (USD  23.98/oz). Base metals are mostly softer as the Dollar picked up in early European trade, with 3M LME copper testing USD 8,400/t to the downside again after trading in a current USD 8,375-463/t intraday parameter. Earlier in the session, Citi said they stay cautious on most commodities, most notably industrial metals over the next 6-9 months, especially nickel, and lean towards fading the recent iron ore rally. The bank suggested that even if China were to step up incremental policy support meaningfully now, there would still be a time lag for their effects, and higher for longer interest rates could dampen economic activity in many parts of the world, a hard landing somewhere remains a risk.

24 Aug 2023 - 09:56- Research Sheet- Source: Newsquawk