EUROPEAN COMMODITIES UPDATES: Energy and metals bolstered by geopolitics and upbeat Chinese data

Analysis details (09:56)

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  WTI and Brent December futures are firmer intraday amid a concoction of factors including heightened geopolitical tensions, upbeat Chinese GDP and activity data, a larger draw in private crude stockpiles, and a marginally softer Dollar. Starting with geopolitics, US President Biden has now landed in Israel while Jordan cancelled a summit with Arab leaders and President Biden after a hospital in Gaza was hit by a rocket. Hamas has blamed Israel while Israel concluded the rocket came from the Palestinian Islamic Jihad militants. Some Arab countries, including the UAE, Egypt, Iran, and Saudi, have pointed the finger at Israel. Furthermore, the corridor for humanitarian aid to the Gaza Strip is seemingly a pressure point, with the Egyptian president this morning suggesting "the idea of displacing Palestinians to Sinai means dragging Egypt into a war against Israel", according to Al Arabiya, while adding a Gaza exodus to Egypt would risk West Bank displacement to Jordan. The Organisation of Islamic Cooperation (OIC) is set to hold an urgent meeting today to discuss the Israel-Gaza situation. Moving on, Chinese economic data overnight topped expectations across the board. To recap the data, Chinese GDP Q3 YY printed at 4.9% vs. Exp. 4.4% (Prev. 6.3%), QQ at 1.3% vs. Exp. 1.0% (Prev. 0.8%), Industrial Output YY at 4.5% vs. Exp. 4.3% (Prev. 4.5%), and Retail Sales YY 5.5% vs. Exp. 4.9% (Prev. 4.6%). The CCP’s mouthpiece Global Times also noted that "China has full confidence in achieving its stated annual GDP growth target of around 5% in 2023, with economic growth of 5.2% in the first three quarters setting a solid foundation". Sticking with bullish data, US private inventory data showed a larger-than-expected draw (-4.4mln vs exp. -0.3mln) while the internals were mostly bullish. Traders are on the lookout for confirmation from the DoEs later today. WTI resides around USD 87/bbl (in a USD 86.29-87.80/bbl range) while its Brent counterpart trades near USD 91.50/bbl (in a USD 91.15-92.18/bbl parameter). Elsewhere, Dutch TTF prices are on the march higher once again, irrespective of Australia's Offshore Alliance members at Chevron endorsing draft enterprise agreements and suspending protected industrial action at Chevron's LNG facilities. The gas market could be buoyed by geopolitical risk premium, and as the winter season approaches. Dutch TTF is firmer by almost 6% at the time of writing at EUR 51.75/MWh.


• The metals complex is buoyed across the board, with precious metals benefitting from the aforementioned geopolitical risk premium – XAU has made fresh weekly highs at USD 1,942.76/oz as it targets the high from 20th September at USD 1,947.48/oz ahead of the psychological figure. XAG meanwhile eyes the peak from 29th September at USD 23.55/oz as the metal reclaimed a USD 23/oz handle from a USD 22.77/oz intraday base. Elsewhere, industrial metals cheers the Chinese economic data overnight which topped analyst forecasts across the board, with analysts now more confident that China’s recent support measures may be enough to reach the 2023 GDP growth target of around 5%. Base metals have also seen the release of BHP and Antofagasta production numbers, although nothing stands out from these metrics. It’s also worth noting that LME copper stockpiles printed a large build of around 11,000 tons, hitting a two-year high. 3M LME copper hovers around session highs at the time of writing, with the red metal reclaiming a USD 8,000/t handle within a USD 7,987-8,064.50/t intraday band.

18 Oct 2023 - 09:58- Research Sheet- Source: Newsquawk