EUROPEAN COMMODITY UPDATE: Crude bid as the USD pauses for breath pre-CPI, gold modestly capitalising

Analysis details (10:45)

Crude benchmarks are bid after a concerted pick-up in the European morning that occurred without any obvious fresh fundamental driver. WTI and Brent are posting gains a little more than USD 1.00/bbl. News flow for the complex has revolved around COVID (demand side) and geopolitics (Supply side). China has locked down more areas for one-week after detecting additional new COVID cases; Japan’s capital Tokyo sees cases continue to significantly increase after eclipsing the 10k/daily mark for the first time since March earlier in the week. On the geopolitical front, the mood music between Iran and Saudi Arabia has been positive this morning though Iran’s President makes clear they will not be shying away from their rights in order to revive the JCPOA. After the US close on Tuesday, private inventory data from the API reportedly posted an unexpected crude build, with the products all building as well; for the session ahead, the EIA release is expected to show a headline draw of 0.154M while the internals are forecast to be mixed. Note, the session more broadly is dominated by the US CPI release, which has the potential to dictate broader macro price action for the day and as such commodity pricing. Moving to metals, spot gold is modestly firmer managing to capitalise on the session’s bout of USD easing, though the index remains bid overall; the yellow metal is firmer, but is very much within familiar parameters. More broadly, LME Copper has benefited from the generally constructive APAC tone though participants will remain cognisant of and cautious around the China-COVID situation given its recent implications for price action.

13 Jul 2022 - 10:45- MetalsData- Source: Newsquawk