EUROPEAN COMMODITY UPDATE: Contained trade amid fresh demand-side developments as markets await the Fed

Analysis details (10:55)

WTI and Brent are modestly firmer at present, posting gains of around USD 1.00/bbl, in-fitting with the performance of US equity futures rather than European peers as the ‘turnaround Tuesday’ diverges between the regions. Currently, the benchmarks are towards the mid-point of circa. USD 2.0/bbl parameters for the session. Newsflow explicitly for the complex and broader geopolitics has been fairly limited but does feature China’s NDRC lifting gasoline and diesel retail prices from June 15th by CNY 390/T and CNY 375/T respectively. Elsewhere, the demand-side of the situation remains in keen focus as China has warned that Beijing needs to go “all out” in order to block the spread of the bar linked COVID outbreak, an outbreak that has now sparked a criminal investigation into the venue. On a brighter note, the likes of Ryanair remark that bookings continue to strengthen and inflation is not impacting summer demand – a positive sign on the demand side for the complex. In terms of the session ahead, the only crude-specific scheduled event is the weekly Private Inventory release, where the headline previously printed a 1.85M build; for reference, Wednesday’s EIA release is expected to show a headline draw of 1.2M. Overall, the broader narrative for the complex will likely continue to be dictated by macro developments surrounding, in particular, the Fed until the second half of the week at least. Moving to metals, spot gold is essentially unchanged on the session around USD 1820/oz after falling below the 10-, 21- & 200-DMAs yesterday. Technically, the 18th May low at USD 1806/oz may provide some support. Elsewhere, LME Copper is modestly softer and below USD 9.5k/T given overarching sentiment and China demand-side updates; note, recent Axios reports indicate Biden is considering removing some Section 301 tariffs on China – but, this is unlikely to include industrial items such as aluminium and steel.

14 Jun 2022 - 10:55- Fixed IncomeResearch Sheet- Source: Newsquawk