EUROPEAN COMMODITIES UPDATE: Crude clipped from APAC highs, tariffs in focus

WTI/Brent: -0.6%/-0.5%

• Crude futures gained after Friday's Oval Office bust-up, which saw a heated exchange between US President Trump and his Ukrainian counterpart Zelensky.


• Since, European officials met with Zelensky in the UK with language from the meeting constructive with reports of leaders potentially being willing to increase defence spending and talk of an Italian-led summit.


• Given the constructive language out of Europe and some signs that relations between the US and Ukraine are not as strained as Friday showed (i.e. reporting around minerals) crude benchmarks have pulled back from highs, Brent from USD 73.67/bbl; currently, trading either side of USD 72.50/bbl, while WTI saw highs of USD 70.60/bbl, now trading around 69.40/bbl.


• ING highlights that speculators have reduced net longs in ICE Brent by 44k lots over the last reporting week, leaving them with a net long in excess of 220k lots. They write that the bulk of this move was driven by longs liquidating positions.


• Also to be aware of is the expiry of the US pause on Mexico and Canada and the additional 10% on China from Tuesday. Elsewhere, in the Middle East, Israel conducted strikes on Gaza on Sunday, and they announced that they had ceased the entry of humanitarian aid into Gaza; Foreign Minister Sarr said that Israel is ready for the second phase of the agreement but “not for free”.


• Sarr’s comments are very much in fitting with recent commentary, while they are also increasing pressure on Hamas to extend the first phase of the Gaza agreement, rather than introducing the second phase.


• Ahead, the US docket dictates with ISM Manufacturing, the highlight in addition to anything on the above points.

Dutch TTF: +4.0%

• Newsflow focus points are in-fitting with the above given the geopolitical tone around Ukraine. However, price action remains much more constructive with Dutch TTF higher by over EUR 2/MWh at best.


• Upside, which is driven by a paring of much of the losses seen last week, in addition to the tensions around Ukraine, meaning a resumption of supply via the region is perhaps unlikely to materialise in the very near term


• On the point of supply, Russian President Putin’s ally Matthias Warnig pushes a deal to restart the Nord Stream 2.

Gold: +0.4%

• Firmer, benefitting from the ramp up in geopolitical tensions over the weekend, a ramp up the Kremlin has recently surmised as showing that “the division of the West has begun”. Furthermore, a soft USD and only very limited upside in US yields is helping/allowing the yellow metal to climb.


• At the top-end of a USD 2855-2876/oz band. As such, while the metal is bid it remains shy of Friday’s USD 2885/oz peak and then someway from that week’s ATH at USD 2956/oz.


• Focus points for the metal are also US data, Fed speak, Geopols and tariffs; in the immediacy, the ISM Manufacturing figure and its USD/fixed action may dictate whether a test of Friday’s high is feasible or not.

Copper: +0.1%

• Managed to shrug off the geopolitical tensions and instead benefitted from the soft dollar and a firmer APAC handover where strong Chinese data provided support.


• Specifically, the region was underpinned following the better-than-expected official Chinese Manufacturing PMI data over the weekend which showed a surprise return to expansion territory, while Caixin Manufacturing PMI also topped forecasts.


• However, gains for China overnight and base metals generally in European trade have been tempered back towards unchanged levels as we wait to see if the extra 10% tariffs on China will be implemented or not on Tuesday and how China will respond.


• Ultimately, 3M LME Copper is back towards opening levels of USD 9358 in USD 9330-9432 parameters.

03 Mar 2025 - 10:20- ForexGeopolitical- Source: Newsquawk