EUROPEAN COMMODITY UPDATE: Commodities largely tread water awaiting the next catalyst

Analysis details (09:55)

WTI and Brent front-month futures hold onto modest gains, but the upside remains capped by the cautious risk tone in early European trade. Overnight, the complex was relatively uneventful as it took a breather from the recent volatility, whilst the US DoE said also said it will sell 10mln bbls of oil from the SPR in November as part of its March plan to deliver 180mln bbls to the market. The DoE said the US has already sold 155mln bbls of oil from the SPR and the latest sale will bring that to 165mln. This also follows rumours last week - which were rebuffed by the US DoE - which suggested the US may start replenishing the SPR when oil prices fall under USD 80/bbl. Moving eastward, eyes remain on the reconfiguration of supply as Russian oil is seemingly favoured by large consumers – namely China and India – whilst the Middle East ups supply to the West. There were also reports yesterday that Iran is offering the crude in tankers anchored in Malaysia and Indonesian waters at discounts of around USD 5-7 to Russian cargoes. Meanwhile, one development to keep an eye on - Russia’s Gazprom said it will halt the power of its Siberian gas pipeline to China on Sept 22-29, citing maintenance. It is difficult to envisage Russia not turning the taps back on to China given Russia is under no Chinese sanctions and the leaders of Moscow and Beijing have a seemingly warm relationship, which was reaffirmed at the SCO last week. Over to metals, spot gold is subdued by the Dollar but in recent ranges after hitting multi-year lows last week as the yellow metals look ahead to the Fed. LME futures resumed trade following the long weekend, with 3M copper flat at the time of writing under the USD 7,800/t, mimicking the risk tone and awaiting the next catalyst.  

20 Sep 2022 - 09:55- Research Sheet- Source: Newsquawk