EUROPEAN COMMODITY UPDATE: Dollar tailwinds for commodities, but copper bucks the trend

Analysis details (10:22)

WTI and Brent front-month futures are softer intraday as DXY picked up overnight and in early European trade, whilst China’s COVID woes remain a grey cloud for the complex, with daily new cases in China rising to a six-month high for Sunday. “Global oil demand is expected to grow by around 1.7MMbbls/d next year and China is expected to make up almost 50% of this growth”, according to the desk at ING, “There is plenty of uncertainty around how the domestic Covid situation develops and how authorities tackle any further outbreaks through 2023. Demand uncertainty for next year is not isolated to China. The deteriorating macro backdrop raises concerns over global growth”, the bank says. WTI Dec resides under USD 91/bbl (vs high 92.17/bbl) whilst Brent Jan trades around USD 97/bbl (vs high 98.30/bbl). Over to gas, the European gas market is poised for a milder winter than usual whilst US gas markets brace for colder short-term weather. The milder-than-expected temperatures have so far helped Europe for the upcoming heating season, with gas storage still standing at over 95%, but supply concerns remain for next year. European leaders are holding talks regarding a gas price cap, but the latest revisions of the EU gas price cap proposal have maintained a soft approach to the cap, suggesting the council "may" adopt a temporary price cap mechanism contingent on eight criteria, according to a document cited by the FT. Over to metals, spot gold moves in tandem with the Buck and oscillates on either side of its 50 DMA at USD 1,672/oz today in the run-up to the midterms. Meanwhile, base metals are mixed with LME copper trading with mild gains just under the USD 8,000/t mark. Reports this morning suggested copper-producer Chile was subject to a magnitude 5.2 earthquake. Furthermore, Chile's Codelco offered Chinese copper buyers 2023 supply at a premium USD 140/t (prev. USD 105/t; +33.3% Y/Y) according to Reuters sources.

08 Nov 2022 - 10:24- Research Sheet- Source: Newsquawk