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Broad Support From China Easing Restrictions

  • Most commodities have been fuelled by risk-on sentiment today, spurred by Shanghai saying it will lift Covid restrictions on businesses and both Shanghai and Beijing re-opening some public transportation.
  • Crude oil is no exception, up nearly 2% on light trading volumes with US Memorial Day.
  • Traders await a breakthrough on the EU embargo of Russian oil at the EU Summit, with Hungary’s Orban still holding out, although the President of the EU Council, Michel, has stated that sanctions progress has been possible this afternoon.
  • WTI is +1.8% at $117.11, having cleared resistance at $116.43 (Mar 7 high and trend high) which next opens the psychological $120.00.
  • Brent closed +1.9% at $121.67, clearing resistance at $121.13 (76.4% retracement of Mar 7 -15 downleg) and opened $123.44 (Mar 8 high).
  • Specific China-related commodities that have fared well on the day include iron ore (+4.9%), nickel (+4.0%) and copper (+1.1%).
  • Gold meanwhile sits little changed on the day, +0.05% at $1854.0, having unwound earlier gains as the strength in German inflation raises the prospect of faster rate hikes, boosting safe haven yields in the process. Resistance remains $1869.7 (May 24 high) with support at $1807.5 (May 18 low).

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