Commodities: Crude flops as bets for black liquid price gains fail to pay off

Crude-oil futures are heavily lower on Tuesday afternoon -- its worst two-day tumble in a month -- as bets on the black liquid's hoped-for price rise failed to pay off.

"Quite simply, almost everyone in the market has gone long already and it wasn't sustainable," said Jasper Lawler, senior market analyst at London Capital Group.

"Commodity Futures Trading Commission data from Friday showing a net long position of 885m barrels was indicative of extreme sentiment. The result is the market has rolled over," he added.

At about 15:19 GMT, Nymex-traded West Texas Intermediate (WTI) was down 1.6% to $52.16 a barrel, and Intercontinental Exchange-listed Brent was down 1.42% to $54.93 a barrel.

Michael Hewson, chief market analyst at CMC Markets UK, said rising rig counts had acted as a counterweight to the output cuts ordered by OPEC.

"Slowing demand in December also appears to be weighing on prices, alongside a rebound in the US dollar, sending Brent prices back to levels seen at the beginning of last week," he opined.

SwissQuote had earlier on Tuesday said a near-term correction towards $49.61 a barrel for WTI was possible if support at $50.71 was broken.

Lawler continued that the evidence was so far good that OPEC nations and partners, including Russia, were complying with oil output cut promises.

"The OPEC & non-OPEC supply deal and the compliance thereafter are the reason for the huge build up in bullish positions. There are still big sources of uncertainty in energy markets; two of them emanate from the US," he added.

Meantime, on Comex, gold was up 0.03% to $1232.5 an ounce, while silver gained 0.07% to $17.71 a pound. Copper shed 0.36% to $264.2 cents a pound.

London Metals Exchange-listed three-month industrial metals were mixed with aluminium essentially flat, and zinc a jot down. Copper was firmly ahead, but tin was strongly lower.

SwissQuote observed that gold was trading with hourly support at $1177. "In the long-term, the technical structure suggests that there is a growing upside momentum," said SwissQuote.

Think Markets UK chief market analyst Naeem Aslam appeared to support this, suggesting gold's current pullback could be an opportunity to get back into the yellow metal.

"Nothing has changed -- fundamentals are still the same," he said, commenting that Think Markets UK was maintaining its $1250 an ounce target for gold as the US Federal Reserve might not be able to hike rates in March.

"The dovish rhetoric from Mr. Trump would keep the pressure on the dollar which will help gold to regain its mojo," said Aslam.

"Moreover, French and German elections are going to produce a lot of tailwinds for the gold rally. The demand out of China and India for physical metal is still strong -– so why sell gold!"

Among agriculturals, Chicago Board of Trade-quoted corn was up 0.82% to 366.75 cents a bushel, while wheat rose 0.77% to 425.75 cents a bushel.

ICE-traded cocoa was down 0.78% to $2031 a MT, with cotton No.2 rising 0.3% to 75.86 cents a pound. Live cattle rose 0.52% to 116.23 cents a pound.