Commodities: Oil drops on OPEC data but metals recover

Oil futures plummeted on Monday as OPEC revealed a further rise in its production level, while gold rose and selected agricultural commodities posted declines.

In a scheduled data release, OPEC noted in its monthly report that it had produced 31.57 million barrels of oil per day in September, the cartel's highest rate of production since 2012.

Responding to the data, Secretary General Abdalla Salem El-Badri said, “At OPEC, we are hopeful that the industry will see a more balanced oil market in 2016. We have recently seen a contraction in production from some non-OPEC producers and an uptick in demand growth.”

At 1453 BST, the Brent front-month futures contract for November delivery was down 1.65% or 87 cents at $51.78 per barrel, while the WTI was 1.83% or 91 cents lower at $48.72 per barrel. Front month Brent futures gained 10% last week rallying towards $54/bbl from 448/bbl at the start of the week as investors worried crude output in the region would be disrupted. WTI followed Brent futures higher adding 8.7%.

Kash Kamal, senior analyst at Sucden Financial, said, “However, with no reported change in the long term fundamental outlook, as a supply overhang continues to dominate the market landscape, we anticipate the risk premium that was factored in to front month Brent prices last week to dissipate gradually provided the current situation in Syria remains unchanged.”

Base metal futures were largely in positive territory on the London Metal Exchange. Past the midway point of trading, three-month delivery contracts of primary aluminium (up 0.2%), copper (up 0.4%), lead (up 1.4%), tin (up 0.2%), and zinc (up 1.4%) were all trading higher, but nickel (down 0.9%) shed some of last week’s gains.

On the precious metals front, COMEX gold futures contract was up 0.58% or $6.70 at $1,162.60 an ounce, while spot gold was 0.78% or $9.03 higher at $1,165.56 an ounce. COMEX silver rose 0.80% or 13 cents to $15.95 an ounce, while spot platinum was up 1.17% or $11.53 at $994.48 an ounce, extending Friday’s gains further.

Finally, headline agricultural commodities futures were largely trading lower. CBOT corn (down 0.07%) and wheat (down 0.54%), ICE cotton (down 0.03%) ICE cocoa (down 0.59%) futures headed lower while CME live cattle (up 0.60%) futures rose.