Commodities: Oil drops as Alberta wildfires move away from key installations

Commodities were caught in a downdraft on the back of weaker than expected data out of Asia’s largest economy and after Chinese regulators warned they might clamp down on speculation further.

BBC reports over the weekend that the wildfires raging in Alberta, Canada had slowed their rate of advance also took their toll on crude oil futures, with the latest reports highlighting how the blaze was moving from key oil sector installations.

Combined, those headlines saw the Bloomberg Commodity index retreat 1.90% to 165.02 as of 19:24 BST, alongside an advance of 0.31% to 94.18 in the spot US dollar index.

Key as well for Monday’s price action, incoming Saudi oil minister Khalid Al-Falih said he would maintain the Kingdom’s oil policy under his predecessor of limiting supplies in order to defend market share.

Chinese data in focus

Data released on Sunday by China’s customs administration revealed that exports and imports shrank by 1.8% and 10.9% year-over-year in April when measured in dollar terms, worse than market forecasts for flat sales abroad and a 4.0% drop in purchases from overseas.

As regards specific commodities, oil imports by China jumped by 4.4% or 335,000 barrels per day to 7.90m b/d, but imports of copper ore and concentrates declined by 115kt to 1,260kt, weighing on prices.

Iron ore imports also fell back, shrinking by 1.9mt month-over-month, albeit likely due to day-count differences between March and April, Barclays’s Feifei Li said in a research report sent to clients.

Nonetheless, Li believed current momentum in iron ore might extend into the second quarter, “at least in their view”.

Three-month copper futures on the LME ended the session down by 1.5% to $4,715.00 per metric tonne.

Overnight, the most traded rebar futures on the Shanghai Futures Exchange ended the day limit-down, retreating 6% to 2,175 yuan ($334.41) – their largest one-day fall on record.

Iron ore futures on the Dalian Commodity Exchange for delivery in September fell in tandem, closing the session down by another 6% to 388 yuan per tonne.

Spot platinum got trounced and was off by 3.40% to $1,043.15/oz. in afternoon trading, alongside a 2.58% drop in the COMEX-traded July 2016 silver futures contract to $17.08/oz. while gold for next month delivery was down 2.09% to hit $1,267/oz..

Agricultural space also sees losses

Among soft commodities, July 2016 futures for corn and wheat were down by 1.92% and 1.67%, respectively, on the Chicago Board of Trade.

Cocoa futures on ICE eked out a small gain, rising 0.16% to $3,079.0 per metric tonne.

Live cattle futures gained 2.09% to $123.25/lb.