Energy and soft commodities gain, metals lower

Stronger-than-expected economic data out of the States for the month of January, together with a 'bullish' set of weekly oil rig count figures from Baker Hughes served to push most energy futures higher at the end of the week.

Both the key monthly US non-farm payrolls report and the very widely-followed ISM manufacturing sector purchasing managers survey came in well ahead of forecasts at 304,000 (163,000) and 56.6 (54.0), respectively.

Analysts appeared to take a uniformly positive view of the latest US jobs data, although on the outlook for US and global manufacturing, both positive and negative views on the outlook were making the rounds.

On the more confident side, analysts at Barclays Research said: "This latest ISM print suggest that the signs of slowing that we had seen in late 2018 in various indicators of regional sentiment (including the December ISM and some other regional indicators) may have overstated deceleration in the manufacturing sector."

Against that backdrop, as of 2011 GMT, the Bloomberg commodity index was up by 0.23% to 80.91 and well-off its worst levels of the session, as was the US dollar spot index, which was edging lower by 0.01% to 95.5640, but after having hit an intra-day low at 95.40.

Front month Brent crude oil meanwhile was adding 2.61% to $62.43 a barrel on the ICE, alongside a gain of 3.44% to $1.4250 per gallon on NYMEX.

Contributing to the buying momentum in energy, after the London close, consultancy Baker Hughes reported that the US onshore oil rig count had fallen by 15 over the prior week to settle at 847.

As well, in a research report sent to clients, Barclays Research said it expected the annual rate of growth in domestic US oil output to slow as a result of takeaway constraints in the Permian basin together with an increased focus on capital discipline by producers, "especially in the wake of the sharp decline in oil prices recently".

According to the US Energy Information Administration, over the first 11 months of 2018, America's total domestic output grew at an average monthly pace of nearly 170,000 barrels a day.

Base metals on the LME on the other hand were mostly lower, weighed down by the release overnight of a very weak reading for the Caixin factory sector Purchasing Managers' Index referending the month of January.

Caixin's China factory sector PMI came in at 48.3 for January, which was down from a reading of 49.7 in December and well below the consensus forecast of 49.6.

But there was perhaps a silver lining, with the survey compiler noting the improvement seen in the sub-index for new orders to its best level since March 2018, a development it attributed to the truce in the US-China trade war.

Yet analysts were cautious about buying into that notion.

"The weakness was domestic-demand oriented, with the new export orders subindex recovering to above 50, hitting the highest point since March last year. This jars with the official gauge, however, which remains deeply below 50," said Freya Beamish at Pantheon Macroeconomics.

"We expect a Sino-U.S. deal by the spring, but for now, we set more store by the official version of events. China likely is moving to re-start imports from the U.S. already, but we are expecting U.S. importers to wait for further clarity on tariffs."

Be that as it may, three-month LME copper futures slipped from $6,176 per metric tonne at the session open to finish at $6,139.

Soft commodities also found a bid, with March wheat on the Chicago Board of Trade adding 1.45% to $5.24 a bushel.

To take note of, as part of the ongoing trade talks with the US and as a 'goodwill' gesture, overnight China committed to ramping-up its purchases of American soybeans.