EUROPEAN COMMODITIES UPDATE: Crude firmer while aluminium spikes on EU sanctions

Crude Oil: WTI Mar +1.4%, Brent Apr +0.6%

• Firmer trade across the crude complex amid ongoing geopolitics and with the European Commission this morning targeting Russian aluminium, shadow fleet and tech.


• Elsewhere, desks suggest the crude complex could be underpinned amid concerns over whether OPEC+ will actually reintroduce barrels to the market in April given the fragility of the energy complex.


• Further, some also flag lower CPC supply after Ukrainian drones damaged a Russian pumping station.


• On sanctions against Russia, analysts at ING suggest "If recent US sanctions against a large share of the Russian shadow tanker fleet are effective, it would likely force Russian crude to use Western shipping services. That would ensure Russian crude trades at, or below, the current cap. This, however, would likely be short-lived as Russia and buyers will find ways around sanctions. Russia, for example, is likely to increase the size of its non-sanction shadow fleet. To be sure, it might seem counterintuitive to see the price cap tighten at a time when the US has started talks with Russia on a peace deal to end the war in Ukraine."


• Ahead, little on the scheduled docket but the weekly Private Inventory data will be released tonight on account of the US holiday on Monday.


• WTI Apr currently sits in a USD 71.69-72.46/bbl range while its Brent counterpart resides in a USD 75.80-76.48/bbl parameter.


• Uneventful trade across gas contracts thus far but European prices tumbled to levels under EUR 50/MWh amid a constructive high-level meeting between the US and Russia yesterday coupled with expectations for milder weather.

Precious Metals: Gold +0.3%, Silver +0.2%, Palladium -0.1%

• Modest gains were seen across spot gold and silver with the Dollar steady but as spot gold prints fresh record highs, buoyed by the broader geopolitical landscape, with the US-Russia meeting not received well by Ukraine.


• Spot palladium narrowly underperforms, potentially amid jitters surrounding the auto sector after US President Trump suggested the auto tariff rate will be "in the neighbourhood of 25%", from April 2nd 2025.


• Spot gold currently resides in a USD 2,942.21-2,946.70/oz range after topping the prior all-time-high at 2,942.78/oz.

Base Metals: 3M LME Copper U/C

• Mostly firmer following a mostly lower APAC session, with aluminium prices shooting higher after the European Commission unveiled its 16th Russian sanctions package this morning, targeting Russian aluminium, shadow fleet and tech.


• Meanwhile, the complex continues to reprice demand implications for several weeks of tariff updates since Trump's inauguration last month (full tariff update and timeline available on Newsquawk).


• On Tuesday, Citi lowered its 6-12 month copper forecast to USD 8,500/t (prev. USD 9,000/t) and sees copper-end-use consumption climbing 1.7% in 2025, reflecting growth headwinds from tariffs and restrictive developed market monetary policy.


• 3M LME copper resides in a USD 9,407.85-9,494.00/t range at the time of writing.


• Dalian iron ore ended daytime trade at +1.5% with traders noting support from improving demand and larger destocking expectations at major Chinese ports.

19 Feb 2025 - 10:15- ForexGeopolitical- Source: Newsquawk