Commodities: Oil, copper futures in tepid recovery

Oil futures endured a volatile Tuesday, after OPEC rolled over its crude production level, last set at 30m barrels per day, following the conclusion of its oil ministers' summit in Vienna, Austria late last week.

In wake of the OPEC announcement, both Brent and WTI closed over 3% lower on Friday. The short-term bearishness extended to Monday’s session with Brent down another 4.37% to $41.12 per barrel, and WTI down 4.95% to $37.99 per barrel lurking around six-year lows.

With industry surveys pointing to OPEC's production level being in the region of 32.1m bpd, well in excess of the cartel’s stated levels, bearish trends remained firmly entrenched well into Tuesday, before a late uptick.

At 1705 GMT, the Brent front month futures contract was down 0.39% or 16 cents at $40.57 per barrel, while the WTI was down 0.13% or five cents at $37.60 per barrel.

Julian Jessop, head of commodities research at Capital Economics, said, “Brent’s (short-lived) dip below $40 per barrel is a further damning verdict on OPEC’s bungled communications after its meeting last Friday.

“However, it was never likely that the group would agree to cut output to boost prices. Instead, any recovery next year will depend on reductions in non-OPEC supply and on stronger demand. On this basis, while we are lowering our end-2016 forecast for Brent from $60 to $55, we continue to expect oil prices to stage a partial recovery next year.”

Away from the oil market, most metal futures registered late afternoon declines in Europe. At 1635 GMT, three-month delivery contracts of primary aluminium (down 1.6%), nickel (down 1.0%), tin (down 0.1%), lead (down 0.4%) and zinc (down 1.6%) were trading lower on the London Metal Exchange

The copper contract, still at historic lows, remained under pressure, up 0.4% to $4,589.00 per metric tonne.

Liz Grant, senior account executive at Sucden Financial, said, “LME trading saw price activity mostly lower following disappointing Chinese trade data and lower oil prices and although Chinese copper imports were well up it remained under pressure but still contained in a sideways range broadly $4,515-4,670.

“The afternoon session in London saw prices recover from the earlier lows tracking a slight recovery in oil and as the dollar eased back.”

The Precious metal complex remained under pressure with many traders pricing in a US interest rate hike. COMEX gold futures contract was down 0.30% or $3.20 to $1,072.00 an ounce, while spot gold was 0.19% or $2.04 higher at $1,073.78 an ounce. COMEX silver was down 1.48% or 21 cents to $14.12 an ounce, while spot platinum was down 0.67% or $5.75 to $849.53 an ounce.

Finally, agricultural commodity futures were on a mixed patch in early trading stateside. CBOT corn (down 0.07%), CBOT wheat (down 0.57%) and ICE cocoa (down 2.96%) futures were in negative territory, while ICE cotton (up 0.03%) and CME live cattle (up 0.71%) were trading higher.