Commodities: Oil weak on oversupply concerns, Chinese data dents copper

Both oil benchmarks began Asian trading lower on Tuesday as oversupply concerns returned to dominate market sentiment, while Saudi Arabia mulled a halt to bombing in Yemen.

At 07:44 BST on Tuesday, the WTI was trading at $58.90 per barrel down 3 cents or 0.05%, with Brent down 9 cents or 0.14% at $66.36, testing market patience for the $66-level the latter benchmark has hovered around in recent trading sessions. Relative strengthening of the dollar is also playing out as the market awaits further US oil inventory data.

Meanwhile, gold continues to trade below $1200 an ounce. But the precious metal finally ended its three-day losing streak in overnight trading. COMEX gold was fetching $1187.90 up $1.10 or 0.09% early on Tuesday.

Additionally, COMEX silver was seen trading around four-week highs, up 4 cents or 0.18% higher at $16.41 an ounce. Platinum was up 73 cents or 0.06% at $1,145.71 an ounce while palladium was down 66 cents or 0.09% at $779.33 an ounce.

Chris Beauchamp, senior market analyst at IG, said: “Gold has slipped to its lowest level in over a month, breaking key support at $1180, as it looks to break below the range in which it has been stuck for the entirely of April.”

“A continuation of the US dollar strength that appears to be gathering pace spells more gloom and doom ahead, with all eyes now on the March low at $1150.”

Meanwhile, weaker data from China has dented copper’s recent rally. Final April reading for a manufacturing Purchasing Managers’ Index (PMI) published by HSBC and Markit came in at 48.9, the lowest in a year and missing the median forecast of 49.4.

A level below 50 signifies contraction in manufacturing activity. With the London Metal Exchange closed for a public holiday on Monday, copper shed nearly 1.3% stateside overnight firmly ending a seven-day rally overnight. COMEX Copper for July delivery came in 0.33% or 95 cents lower at $291.10 per pound on Tuesday.

Elsewhere, Goldman Sachs is in talks to sell its coal mines in Columbia, according to a news report. Citing people “familiar with the negotiations”, the Wall Street Journal, reported over the Labour Day weekend that the global investment bank could proceed with the sale even at a potential loss.

If the sale does take place, it would end Goldman Sachs’ presence in the physical production of raw materials. The bank has already divested its holdings in an aluminium storage business and recently sold off power plants.

On the soft commodities front, CBOT corn and wheat contracts, as well as ICE cocoa and cotton contracts were all down, however CME live cattle contract was trading in the green by $1.55 or 1.04% at $150.73 per pound. Traders in Chicago told Sharecast that cash prices, strength in the US spot market and demand for beef was seen supporting futures prices.