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COMMODITIES: Softer Oil, Metals Backdrop Supportive of Core FI

COMMODITIES

Crude oil prices are once again under pressure, with front-month Brent and WTI futures each around 1% lower today. Industrial metals are similarly weaker (iron ore -1.8%, copper -1.1%, steel -0.7%).

  • These moves will have provided some support to core FI, with the EUR and USD 5y5y inflation swaps around 1.5/2bps lower at typing.
  • Our commodities team notes that concern around future global oil demand - especially in China – and the planned return of OPEC+ supply is outweighing the impact of near-term tightness and geopolitical/weather-related supply risks.
  • Next support in Brent is seen at $79.32/bbl (76.4% retracement of the Jun 4 - Jul 5 bull leg), while key WTI support is at the June 4 low at $72.23/bbl.
     

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