EUROPEAN COMMODITIES UPDATE: Metals are mostly subdued but crude remains underpinned by this week’s stockpile draws

Analysis details (10:22)

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  WTI and Brent futures have tilted modestly firmer on the session after a horizontal APAC session and following the former’s August contract and the latter’s September contract both settled higher by almost USD 2/bbl apiece. The sector yesterday was buoyed by this week’s constructive inventory data, whereby larger-than-expected draws were printed. That being said, desks suggest that bulls remain hesitant amid the slew of hawkish central bank commentary emanating from the Fed, BoE, and ECB at the Sintra Economic Forum. Fed Chair Powell was on the wires this morning, this time from Madrid, and suggested that a strong majority of Fed policymakers see two or more rate rises by the end of this year. Most of the commentary was in-fitting with recent remarks, but perhaps one of the most interesting features within these remarks are the expectations for May PCE data, due Friday 30th June; Powell said Core PCE likely rose 4.7% Y/Y in May (which would be in line with the current consensus), overall PCE estimated to have risen 3.9% Y/Y (current consensus looks for 4.6%). Aside from that, complex-specific newsflow this morning has been light, but prices remain underpinned by the aforementioned inventory data coupled with a pullback in the Dollar and some upticks across stocks, albeit modest. WTI August resides just under the USD 70/bbl mark (vs low USD 68.95/bbl) while Brent September sits around USD 74.50/bbl (vs low USD 73.60/bbl). Ahead, participants may focus on the German CPI, and US IJC alongside the US GDP Final for impetus.


• Over to metals, spot gold is subdued given the strengthening of the Dollar seen this week, with the yellow metal hovering just north of the USD 1,900/oz mark as it returned to levels seen mid-March, with the next downside level around USD 1,895-96/oz (lows from 14th March and 18th Jan), with the next level at USD 1,885.70/oz (low from 15th March). Again, German CPI and the US data later today could influence price action in the absence of other major drivers (aside from month/quarter/HY-end). Base metals are softer across the board amid the recent hawkish central bank commentary, whilst concerns surrounding China’s economic recovery remains a grey cloud. 3M LME copper continues to lose ground and has fallen under USD 8,250/t to current lows of around USD 8,179/t.

29 Jun 2023 - 10:24- Research Sheet- Source: Newsquawk