EUROPEAN COMMODITIES UPDATE: Subdued trade across crude, gold and base metals amid China’s COVID woes

Analysis details (10:58)

WTI June and Brent July are subdued in early trade as the crude complex gears up for the OPEC+ confab this week – whereby ministers are expected to maintain current oil policy despite pressure from consuming nations to increase output. The elephant in the room would be Russia’s current situation and what is reported to be declining output as demand for Russian energy dwindles. This does not bode well against the backdrop of output limitations among some African nations leading to over-compliance with the current deal. On the demand side, China’s COVID situation remains a headwind as Beijing has asked city residents not to leave the area unnecessarily, whilst school reopening has been postponed. Adding to this, Fitch downgraded its China GDP growth forecast to 4.3% from 4.8% given COVID outbreaks, although the 2023 forecast was raised. As a reminder, zero community transmissions are required for lockdowns to be lifted. Other risk events this week include the FOMC and US NFP – whilst markets may move on these, the broader commodity trend will likely depend on Russia-Ukraine, China, and OPEC+. Over to metals, spot gold is softer but maintains its head above USD 1,850/oz with the 200 DMA around USD 1,834/oz. Finally, for base metals, LME copper, zinc and aluminium are all posting losses in excess of 2% as traders cite lower demand prospects from China.

03 May 2022 - 10:58- MetalsResearch Sheet- Source: Newsquawk