EUROPEAN COMMODITIES UPDATE: Dollar revival exerts downward pressure on commodities

Crude Oil: WTI Apr -0.7%, Brent Apr -1.0%

• Subdued price action across the crude complex, with prices weakening as the European session went underway and the dollar trending higher.


• Crude-specific newsflow has been light but yesterday's DoEs (after the European close) showed a larger-than-expected build (4.633M vs exp. 3.0M) and larger than the Private Inventories (+3.3M) indicated.


• Sentiment for the complex could also be subdued by the downbeat commentary from the EZ flash PMIs, which suggested "Economic output in the eurozone is barely moving at all. The somewhat milder recession in the manufacturing sector is only just being overcompensated for by the barely noticeable growth in the services sector".


• Elsewhere, in potential geopolitics, Sweden's PM said they are looking into a breach of an undersea cable within the Baltic Sea; the Coast Guard adds that the suspected breach occurred in Sweden's EEZ.


• Ahead, next week sees the International Energy Week in London but is unlikely to provide much impetus to the energy complex given the ongoing fluidity of fundamentals. Markets could also be eyeing China's NPC Standing Committee meeting for anything that gives clarity on China's demand.


• WTI Apr resides in a USD 71.87-72.77/bbl range while its Brent counterpart sits in a USD 75.89-76.75/bbl.

Nat Gas: Dutch TTF +0.6%, US Nat Gas +3.4%

• Divergence between European and US gas prices with the dichotomy likely a result of reports that EU's Energy Commissioner said the EU is looking for more gas, including from the likes of the US, to replace Russian supplies, via Reuters


• The draft reportedly shows that the EU is aiming for long-term LNG contracts to stabilise prices. The EU is also looking for renewable energy to cut its overall reliance on fuel.

Precious Metals: Gold -0.2%, Silver -0.1%, Palladium -1.3%

• Lower trade across precious metals as the Dollar attempts a recovery from its recent tumble and in turn prompting downside across metals.


• It was also reported that record gold prices have dampened demand at top Asian hubs, with buyers in India and China reportedly "sitting back" and waiting for a drop in prices.


• Spot gold resides in a USD 2,916.82-2,949.93/oz range with the next upside level the record high at USD 2,954.95/oz and potential support at USD 2,892.07/oz (18th February low).

Base Metals: 3M LME Copper -0.5%

• Lower across the board amid the aforementioned recovery in the Dollar coupled with flimsy risk sentiment, albeit in the absence of macro newsflow.


• Sentiment for the complex could also be subdued by the downbeat commentary from the EZ flash PMIs, which suggested "Economic output in the eurozone is barely moving at all. The somewhat milder recession in the manufacturing sector is only just being overcompensated for by the barely noticeable growth in the services sector".


• 3M LME copper trades with mild losses between a USD 9,455.95-9,570.80/t range, while Dalian iron ore ended daytime trade +1.5% with traders citing signs of recovery in Chinese steel demand while more stimulus is hope.

21 Feb 2025 - 10:00- EU Research- Source: Newsquawk