Commodities: Oil falls as OPEC set to hold output at 30mbpd, gold slips after early gains

Oil benchmarks continued to trade lower, as OPEC ministers gathered in Vienna, Austria on Wednesday to deliberate the cartel’s crude output.

With market consensus in favour of OPEC maintaining its 30m barrels per day (bpd) quota, both Brent and WTI traded lower. At 1248 BST, the Brent front month futures contract for July delivery was down 2.08% or $1.36 at $64.13 a barrel. Concurrently, the WTI was also in the red, down 2.04% at $1.25 at $60.01.

Speaking on the sidelines of the OPEC International Seminar, ahead of the ministers' summit on Friday, Asdrubal Chavez, minister of Popular Power of Petroleum and Mining, denied OPEC had been "unprepared" for the US shale bonanza.

“It is something we have been monitoring for a while, and acknowledge that it has impacted the supply scenario,” he added.

When asked by Sharecast what the next move would be, Chavez said: “The impact of shale will be on the minister's agenda, you’ll just have to wait until Friday.”

Separately, a senior source at the Kuwaiti delegation to OPEC told Sharecast any movement on the production quota was “unlikely”, something which the market was already factoring in.

“Due to heightened uncertainty with an [Iran nuclear] deal, we think OPEC is likely to adopt a wait-and-see approach to the prospect of additional oil,” analysts at Barclays wrote in an advisory email to clients.

Precious metals shed early gains to trade lower as European trading headed into the afternoon. COMEX gold was trading down $5.50 or 0.46% at $1,188.90 an ounce while spot gold was also marginally lower by 0.27% with an ounce fetching $1,189.76. COMEX silver 20 cents or 1.21% trading at $16.60 an ounce.

Base metals market endured yet another torrid intraday session on the London Metal Exchange hounded by concerns over economic activity in China. Apart from zinc (up 2.6%), three-month contracts of aluminium (down 3.5%), copper (down 0.5%), nickel (flat) was all trading lower while lead and tin took an afternoon hammering down 10.7% and 33.6% respectively.

On the agricultural commodities front, CBOT corn (down 0.21), wheat (down 0.42%) and CME live cattle (down 0.10%) contracts were in the red, while ICE cocoa (0.06%) and cotton (0.20%) were trading marginally higher.