EUROPEAN COMMODITIES UPDATE: Subdued trade across commodities but off worst levels as markets await the next catalyst

Analysis details (09:56)

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  WTI and Brent November futures are softer intraday following the choppy price action seen yesterday, which ultimately resulted in subdued settlements for the contracts. The European morning has seen continued downside across the complex as a result of the risk aversion seen across the broader markets, with the former around USD 88.60/bbl (USD 88.19-89.91/bbl range) while its Brent counterpart resides just above USD 92.00/bbl in a USD 91.80-93.36/bbl parameter. Fresh news flow for the complex has been light with price action likely to be dictated by broader sentiment in the absence of macro impulses whilst traders wait for the weekly Private Inventory release. The rise in oil prices has proved to be a concern for central banks, “the recent surge in oil prices will make things even more complicated as it will both worsen the economic slowdown but also push up inflation (or at least reduce the disinflationary trend). Balancing growth and inflation will become even harder and future interest rate decisions will not only be determined by these two variables but also by central banks’ credibility.” ING posits. The Dutch Bank recently released its forecast in which it sees Brent prices breaching USD 100/bbl to the upside in the near term, amid OPEC+ cuts. However, ING does not expect oil prices to remain north of triple-digit prices “as weaker demand and political pressure to increase supply should help to bring oil prices back to levels slightly above 90 USD/bbl”.


• Over to gas markets, Dutch TTF prices are lower by some 7% at the time of writing following the recent surge. Desks frame the recent rise in gas prices in the context of the upcoming heating seasons, whilst Norway’s Troll field reportedly saw a delayed startup following a compressor test, which is impacting some 25mcm per day of capacity. Analysts also suggest that European gas storage remains at a comfortable level of 95% as the new gas year officially commences on the 1st of October.


• Over to metals, spot gold and silver are subdued intraday amid ongoing overhang from the Chinese property sector and as the Dollar surged in early European trade, only to be reeled back in by the firmer JPY after comments from Japanese Finance Minister Suzuki. The yellow metal dipped under yesterday’s low (USD 1,914.60/oz) as it eyes the trough from the 15th of September at USD 1,909.49/oz before the psychological USD 1,900/oz mark. Base metals are mostly lower but off worst levels as sentiment is less downbeat than it was at the European cash equity open. 3M LME copper is still subdued intraday but holds onto a USD 8,000/t handle after dipping to a USD 8,070.50/oz low before stabilising back above USD 8,100/t. Elsewhere, iron ore continued to see losses overnight with Dalian futures falling by over 1.5% whilst Singapore iron ore saw shallower losses of around 0.7%. Analysts at ANZ suggest the "prospects of weaker steel demand are raising concerns for production cuts in the fourth quarter, which would translate to lower iron ore demand," and added that "investors remain wary about the ongoing challenges in China's property markets. Despite many stimulatory measures to revive the real estate industry, there have been minimal impacts on reviving property demand and investment."

26 Sep 2023 - 09:59- MetalsData- Source: Newsquawk