EUROPEAN COMMODITIES UPDATE: Soured sentiment keeps metals subdued and crude gains capped

Analysis details (09:58)

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  WTI and Brent front-month futures trade with no firm direction in early European hours, similar to yesterday’s price action, as market participants await the next catalyst for the complex. Overall market sentiment is somewhat cautious this morning after taking a hit overnight from Microsoft’s sub-par guidance and hotter-than-forecast inflation metrics from Australia and New Zealand. Over in Europe, the German Ifo survey was mixed, with Ifo economists suggesting the German economy is commencing the year with cautious optimism – traders are on the lookout for the release of the latest German government forecasts - which is expected to officially upgrade the 2023 GDP view to +0.2% from -0.4%. Away from Europe, eyes turn to the JMMC meeting next week, with recent sources pointing to a recommendation of unchanged policy. State-side, the latest Private Inventory metrics showed a larger-than-expected build in headline crude (+3.4mln vs exp. +1.0mln), but the internals were bullish for markets – participants will be eyeing the weekly DoE release later today.


• Over in gas markets, CME Nat Gas futures are modestly softer after the recent rally sparked by the restart of the Freeport LNG export facility in the US. Dutch TTF futures are also softer intraday amid as Europe is forecast for milder-than-expected weather, whilst gas storage levels remain healthy.


• In terms of metals, spot gold is pressured as the Dollar trades off worst levels, with the yellow metal around the USD 1,930/oz level at the time of writing (vs yesterday’s USD 1,916.40/oz) low. It’s worth noting that the 10 DMA (at 1,920.43/oz today) has been acting as support for the metal since late December, with prices testing the DMA on at least four occasions so far this year. Elsewhere, mining giant Fresnillo released FY production figures in which total silver production was +1.2% Y/Y, gold production -15.3%, lead production -6.4%, and zinc production -0.2% – FY production was in line with guidance. Base metals are mostly lower as DXY remains off lows and the market mood stays cautious, with 3M LME dipping back under USD 9,300/t (vs high USD 9,349/t).

25 Jan 2023 - 10:00- Research Sheet- Source: Newsquawk