Commodities: Oil benchmarks firm up in Europe, after dropping to six-month low

The commodities market remained on a rocky footing on Wednesday, as oil benchmarks firmed up near six-month lows with spot precious metals also stabilising at relatively lower levels.

At 1615 BST, the Brent front month futures contract was up 1.18% or 63 cents having traded lower earlier in the day, while the WTI also staged a recovery to $49.13 up 2.40% or $1.15 on latest US inventories data showing a weekly fall of 4.2m barrels. Nonetheless, a late European recovery could not mask the fact that both benchmarks continue to flirt with six-month lows on oversupply concerns.

“The gradual drawdown of historically high stockpiles means that despite a steady move towards something like normality, the supply and demand picture remains out of kilter, a fact reflected in the six-month low seen in Brent yesterday,” said IG markets analyst Josh Mahoney.

Meanwhile, precious metals saw another day of lacklustre trading with most spot trades marginally in the green, but gold futures continued to trade lower.

Around 1630 BST, COMEX gold was down 0.26% or $2.80 at $1,093.40 an ounce, but spot gold was up $1.66 or 0.15% at $1,097.14. Additionally spot platinum had a day of respite trading up 0.14% or $1.35 at $986 an ounce, with oversupply pressures keeping the price stubbornly below the $1000 level. COMEX silver came in broadly flat at $14.70 an ounce up a mere five cents or 0.36%.

Plays on industrial metals were pretty mixed. Past the midway point of trading on the London Metal Exchange, three-month futures contract of primary aluminium was up 0.4%, while tin was down 0.2%. Copper, nickel and lead were broadly flat.

Jasper Lawler, analyst at CMC Markets, noted: “A positive close in Chinese stocks helped reduce the volatility in commodities on Wednesday ahead of the latest US Federal Reserve meeting which could have a significant impact on the US dollar in which most commodities are priced.”

Finally, the agricultural commodities market saw major futures contracts in the red on news of bumper crops triggering oversupply concerns and a stronger dollar. CBOT corn (down 1.36%), wheat (down 2.35%), ICE cotton (down 0.73%) and CME live cattle (down 0.22%) contracts were all trading lower. However, ICE cocoa avoided the trend climbing up 0.19% or $6 at $3,210 per metric tonne.