EUROPEAN COMMODITIES UPDATES: Industrial commodities dip amid a flimsy risk tone while precious metals see inflows

Analysis details (09:50)

• WTI and Brent January futures are softer intraday but within recent ranges in a holiday-shortened week with price action largely moving in tandem with broader sentiment overnight and in early European hours amidst a lack of fresh drivers. Crude futures settled relatively flat yesterday in what was a choppy session in thin ranges, taking some pause after the recent recovery rally ahead of the Sunday OPEC+ meeting. The uneventful FOMC minutes and larger-than-expected build in Private Inventories [Crude +9.1mln (exp. +1.2mln), Gasoline -1.8mln (exp. -0.2mln), Distillates -3.5mln (exp. -0.8mln), Cushing +0.6mln] overnight did little to impact prices at the time. Furthermore, on the APAC growth front, Chinese government advisers are to recommend a 4.5%-5.5% growth target for 2024 (vs “around 5%” for 2023), while they noted that maintaining China's growth pace next year requires more fiscal stimulus, according to sources via Reuters.


• Back to European trade, prices have been oscillating just above the USD 77.50/bbl (USD 77.43-97/bbl range) for WTI while its Brent counterpart sits just above USD 82/bbl (vs USD 82.09-65/bbl range). Russian Deputy PM Novak hit the wires this morning and said the domestic market is fully provided with fuel whilst remaining export restrictions on diesel will be lifted soon. This follows reports yesterday that the Russian Energy Minister said a complete export ban lifting for summer diesel is under consideration, with no such plans for winter diesel. Ahead, participants may look for sentiment-induced moves from the UK budget and the US jobless claims, while markets are likely to see OPEC sources heading into this Sunday’s confab.


• Gas prices in Europe meanwhile are modestly firmer but remain within their recent ranges as inventories continued to accumulate much later than usual into the autumn while mild weather has delayed the onset of the winter heating season. However, desks remind us that it is still very early into the winter heating season and there is still uncertainty over how much gas the region will consume and how much can be carried over to next year’s summer refill.


• Over to metals, spot gold trades around the middle of a USD 1,995.53-2,006.46/oz intraday band at the time of writing. Gold reached a three-week peak yesterday, touching USD 2,007.65/oz largely influenced by the USD and a dip in US bond yields in across recent sessions. Furthermore, geopolitical headlines could also be adding some appeal for gold, namely the increased tensions between Israel and Lebanon, whilst desks also flag increased demand in specific regions. For instance, Swiss gold exports have risen, primarily driven by high demand in India - which is a major consumer of gold particularly during the festive season. Spot silver meanwhile remains within yesterday’s USD 22.43-24.01/oz parameter. Base metals are softer across the board amid the broader Dollar strength, flimsy risk tone, and amid reports that Chinese government advisers are to recommend a 4.5%-5.5% growth target for 2024 (vs “around 5%” for 2023). In the iron ore market, futures have continued to rise, albeit with gains capped by factors such as weakening steel prices and a risk-off sentiment among investors. The most-traded iron ore contract on China's Dalian Commodity Exchange saw an increase of 0.5%, with the upside partly attributed to China's potential support measures for real estate developers.

22 Nov 2023 - 09:50- MetalsEU Research- Source: Newsquawk