Commodities: Metals extend gains, oil continues to slide

Metal futures extended gains on Thursday, while oil benchmarks headed lower for the second successive session.

At 1635 GMT, three-month delivery contracts of primary aluminium (up 2.5%), nickel (up 1.7%), zinc (up 1.6%), tin (up 1.2%) and lead (up 1.2%) posted decent upticks on the London Metal Exchange.

While the copper contract continued to trade at historic lows, it too registered a 1.2% gain to $4,627.50 per metric tonne. The rally came as Chinese regulators considered a request from the China Nonferrous Metals Industry Association to investigate short-selling in domestic metal contracts amid the slump in prices, Bloomberg said.

Liz Grant, senior account executive at Sucden Financial, said, “LME prices were on the upward path from the opening of the overnight Asian session as the short covering rally gained further traction.

“Calls from the China Nonferrous Metals Industry Association for government support to help them with the current low price conditions and the possibility of formal investigations by the regulator into “malicious” short selling in local exchanges prompted the sharp move seen in early trading.

“During the London trading day, prices retreated from the earlier highs but remained in positive territory and in good volume. The short covering naturally led to slightly tighter borrowing rates particularly in the case of copper.”

Precious metals also saw marginal upticks with COMEX gold futures up 0.07% or 60 cents to $1,070.30 an ounce, while spot gold rose 0.11% or $1.26 to $1,072.38 an ounce. COMEX silver was up 0.67% or ten cents to $14.27 an ounce, while spot platinum was up 0.98% to $852.53 an ounce.

However, there was no such joy for the oil markets with oversupply concerns returning to dominate market sentiment on a quiet day with the US Thanksgiving break.

At 1747 GMT, the Brent front-month futures contract was down 1.71% or 79 cents to $45.38 per barrel. Meanwhile, WTI was 1.56% or 67 cents lower at $42.37 per barrel, as both benchmarks shed gains made earlier in the week following geopolitical tension in the Middle East.

Alastair McCaig, senior market analyst at IG, said, “Ahead of next week’s OPEC meeting in Vienna, Saudi Arabia has been making further noises about maintaining supply levels to the market.

“Oil prices look to be anticipating more negative sentiment being dumped on them as both US light and Brent crude sell off.”