Commodities: Base metals rally runs out of steam in Europe, oil slips on US data

Base metals rally fizzled out over a volatile session on Thursday, as the Greek debt crisis weighed on commodities trading volumes across the spectrum while US inventories data clobbered the oil markets.

Following three sessions of modest rises, base metals were firmly in the red. Concerns over Chinese imports compounded market misery as the country's refined copper imports fell close to 275,000 tonnes in May, down 12.4% this year, according to official statistics.

Past the midway point of trading on the London Metal Exchange, three-month delivery contracts of primary aluminium (down 1.1%), copper (down 0.8%), lead (broadly flat), nickel (down 1.7%), tin (down 3.2%) and zinc (0.3%) were all trading lower.

Short sellers also hit the precious metals markets, with spot gold down $2 or 0.15% at $1,173.95 an ounce at 1504 BST. Spot platinum was also lower by 57 cents or 0.05% at $1,076.28 an ounce.

Additionally, COMEX silver for September delivery was down six cents or 0.38% at $15.83, while COMEX gold was broadly flat at $1,173.30 an ounce.

Meanwhile, oil markets also took a turn for the worse, as overnight US data indicated that the country's inventory level was still at a record high, despite the recent fall with oil production holding firm at 9.6m barrels per day.

Inventories, while down 4.9m barrels in the week to 19 June, were still at a near-record 463 million barrels, according the US Department of Energy. The Brent front month futures contract was down 26 cents or 0.41% at $63.23 per barrel while the WTI was down 53 cents or 0.88% at $59.74.

Commenting on the general direction of the market, analysts at Barclays noted, “Oil is likely to continue to suffer from expanding supply and rising stocks, so upside potential is limited, while gold appears to be heading for a soft patch as the first US Federal Reserve rate hike gets nearer and dollar strength resumes.”

Finally, on the agricultural commodities front, relative calmness albeit lower trading volumes prevailed. ICE cotton (down 0.02%) and CME live cattle (down 0.60%) were in the red, as CBOT corn (up 1.35%), wheat (up 0.67%) and ICE cocoa (down 0.06%) were all trading lower.