Commodities: Metal, oil futures continue to falter

Oil futures headed lower on Monday hounded by oversupply concerns, while metal futures slipped into negative territory over late afternoon trading in Europe.

At 1620 GMT, the Brent front-month futures contract was down 2.88% or $1.28 at $43.19 per barrel, having risen as high as $44.50 in early trading before shedding the gains. Meanwhile, WTI was 1.20% or 49 cents lower at $40.25 per barrel, as conflicting sentiments in wake of the Paris attacks pulled both futures benchmarks in either direction.

As the Brent-WTI spread narrowed to under $3 per barrel, analysts at Barclays said reports of growing domestic tanker queues and large volumes of Middle Eastern crude heading to the US pointed to a further increase in supply stateside.

“The front end of the WTI curve has done most of the work to manage the apparent oversupply, which may be a signal that the market believes the situation is short term. Fall turnarounds have ended and runs should continue to tick higher, helping manage stock levels through end of the fourth quarter.

“However, in the first quarter of 2016, Brent-WTI should widen to discourage imports during turnarounds, highlighting more downside risk to WTI than Brent, in our view.”

Meanwhile, the base metal market saw a turn in fortune when a timid morning recovery from last week’s losses was reversed in late afternoon European trading. The three-month copper futures contract, dragged down to historic lows in recent sessions, was pulled lower still falling another 2.2% to $4,704.50 per metric tonne on the London Metal Exchange.

Additionally, primary aluminium (down 1.5%), nickel (down 1.7%), tin (down 0.7%), zinc (down 2.1%) and lead (down 1.4%) LME futures were all trading lower, having initially shown signs of a recovery.

However, precious metals largely stayed in positive territory led by gold. The COMEX gold futures contract saw marginal gains of 0.32% or $3.50 rising to $1,084.40 an ounce, while spot gold was 0.17% or $1.87 higher at $1,085.78 an ounce. Away from gold, COMEX silver was broadly flat $14.20 an ounce, while spot platinum was up 0.51% or $4.40 at $863.90 an ounce.

Liz Grant, senior account executive at Sucden Financial, said, “The terrorist attacks on Paris at the weekend sent shock waves through financial markets. Traditional safe havens were sought which lifted gold prices and also the yen.

“LME prices were down across the board with little in the way of fresh news to give support. By mid-afternoon copper was trading below $4,700 at one point, down $115 from Friday and with another 3,550 metric tonne stock added to LME inventories.”

Finally, headline agricultural commodity futures were on a mixed patch in early trading stateside. CBOT corn (up 0.14%), ICE cocoa (up 0.36%) and cotton (up 1.95%) futures traded higher; while CBOT wheat (down 0.35%) and CME live cattle (down 2.26%) contracts registered declines.