EUROPEAN COMMODITIES UPDATE: Softer Buck underpins metals, but oil sees a busy week of catalysts

Analysis details (10:49)

WTI and Brent futures consolidate with modest intraday losses as G7 leaders meet to decide on a Russian oil price cap ahead of Iranian nuclear talks and on the week of the OPEC+ meeting. Over the weekend, a proposal was put forward for a ceiling to be put on prices paid for Russian oil. This proposal will be debated today when leaders meet, with the US strongly promoting the idea. The price-capping scheme will see the continent limit availability of shipping and insurance services that allow the transport of Russian oil. The services will require a mandate linked to a price ceiling being observed by the importer. However, Bloomberg's Blas suggested that the G7 is not going to agree on an oil price cap at its meeting, but it will agree "this is a direction it wants to push forward" and will seek further talks with non-G7 nations to see if it can be put into practice. Moving on, OPEC members will meet on Wednesday, followed by OPEC+ on Thursday – the meetings are expected to confirm the August supply increase of 648k BPD which was telegraphed at the prior confab – eyes will increasingly fall on actual output as producers have sustained over-compliance with production cuts. Meanwhile, Iranian nuclear talks could resume this week in Qatar – although an official announcement has not yet been made. That being said, optimism about an imminent deal is not high as the roadblocks between Washington and Tehran remain. In the West, it’s also worth keeping on the radar reports that French CGT unions will participate in strikes at LNG terminals and gas storage facilities this week, with strikes in the energy sector on June 28th. As a reminder, today’s session is also expected to see the EIA update on last week’s unreleased DoE inventory report. Over to metals, spot gold piggy-backs off the softer Dollar – with the yellow metal currently eyeing its 21 DMA (1,841.60/oz) and 200 DMA (1,845.20/oz) to the upside. Base metals are largely rebounding following the recent rout – also aided by the Buck, with LME nickel rising some 7% in early European trade. Elsewhere, Chilean state-owned copper miner, Codelco said it sees very firm copper prices ahead despite the recent drop and will maintain its annual copper production target at 1.7mln tonnes - LME copper currently sees gains of around 1% but remains sub-USD 8,500/t. Finally, UK PM Johnson has pushed back against lifting steel tariffs on developing nations. UK's International Trade Secretary Trevelyan warned countries, including South Korea, India, and Turkey, could retaliate, according to The Times.

27 Jun 2022 - 10:49- MetalsGeopolitical- Source: Newsquawk