Commodities: Oil up marginally, gold holds ground but base metals continue tepid run

Crude oil benchmarks were broadly flat in Asia on Tuesday amid growing evidence of Middle Eastern producers increasing their output in a bid to maintain market share.

At 02:46 BST on Tuesday, the Brent front month futures contract was up 7 cents or 0.11% at $66.34 per barrel, while the WTI was up 16 cents or 0.27% at $59.69 per barrel. In recent days, oil production figures from Saudi Arabia, Kuwait and the United Arab Emirates have pointed to output levels being at record highs in a bid by the OPEC heavyweights to maintain their clout.

Elsewhere, a senior official from Mexico’s national oil company PEMEX told Sharecast at the Baker & McKenzie Oil & Gas Institute in Houston, USA, on Monday, that the country’s programme to increase private sector participation and foreign direct investment was on track with the core objective of increasing headline oil production "unhindered by a lower oil price."

Meanwhile, in a note to clients, investment bank Goldman Sachs marginally lifted its average price for 2015 Brent crude to $58 per barrel from $52 and for the WTI from $48 to $52 per barrel; although both forecasts remain a far cry from mid-2014 price levels.

Commenting on supply side developments, Alastair McCaig, market analyst at IG, said: “The rally of recent weeks had led many to think that the great oil bear market had come to an end, but a failure to maintain momentum is indicative that oil traders are still of a broadly bearish disposition.

“Ample supply is a tale that had seemed to lose its force in the first quarter of the year, but it will return with a vengeance should fresh drilling efforts pick up in the US.”

In the precious metals market, gold held firm around a three-month high level on weaker US and Chinese macroeconomic data. Having closed higher for five sessions in a row, Tuesday's trade began marginally lower with the July delivery contract at $1,222.30 an ounce, down $3.00 or 0.24%. Spot gold was also marginally lower at $1,221.64 down $3.87 or 0.32%. Concurrently, COMEX silver was trading at $17.55 an ounce down 18 cents or 1.03%.

The market is now turning its attention to the minutes of the US Federal Reserve’s April policy meeting, due for publication on Wednesday, for clues on when it could raise interest rates. Switching to base metals, investors would be looking for clues from Beijing on when and how the Chinese government would undertake its much touted stimulus measures further.

In the interim, base metal trading remained tepid on the London Metal Exchange with copper (down 0.6%), lead (down 0.2%), nickel (down 1.4%) and zinc (down 0.4%) all firmly in the red.

Finally on the agricultural commodities front, CBOT corn (down 0.14%), ICE cotton (down 0.40%) and CME live cattle (down 0.51%) were all trading lower, while CBOT wheat (up 0.29%) and ICE cocoa (up 0.22%) were on the rise.