EUROPEAN COMMODITY UPDATE: Commodities knocked by a stronger Dollar and a drift in sentiment

Analysis details (10:25)

WTI and Brent futures are softer intraday as the Dollar claws back some recently lost ground and sentiment remain tilted to the downside, whilst China’s COVID situation remains an overhang for the complex. Further on China, China's Guangzhou reportedly locked down the third district due to coronavirus, whilst eight (out of eleven) districts have suspended in-person classes. Elsewhere, IEA’s Chief Birol was on the wires and suggested OPEC+ might need to rethink its output cut decision – note, the next OPEC+ confab is due in early December. Over to the US, yesterday’s Private Inventory report showed a larger-than-expected build (+5.6mln vs exp. +1.4mln) with the internals somewhat mixed. The EIA meanwhile released its Short-term Energy Outlook (STEO) in which it raised 2022 world oil demand growth forecast by 140k BPD to 2.26mln BPD Y/Y increase but cut the forecast for 2023 world oil demand by 320k BPD and now sees 1.16mln BPD Y/Y increase, while it sees US crude output to rise 580k BPD to 11.83mln BPD in 2022 (prev. forecast last month rise of 500k BPD) and sees US crude output to rise 480k BPD to 12.31mln BPD in 2023 (prev. rise of 610k BPD). WTI Dec resides just above the USD 88/bbl mark whilst Brent Jan tested support at its 200 DMA to the downside at USD 94.64/bbl. Over to metals, spot gold swayed from gains to losses after testing resistance at its 100 DMA (1,715/oz) in early European hours, before a turn in risk sentiment spurred the Dollar and hit the yellow metal – which now eyes 1,700/oz to the downside. The downbeat risk tone and firmer Dollar are also pressuring base metals, but 3M LME copper holds onto a USD 8,000/t handle after testing USD 8,100/t to the upside overnight. 

09 Nov 2022 - 10:27- Research Sheet- Source: Newsquawk