Commodities: Oil fluctuates, base metals tumble on China slowdown fears

Base metals registered declines on Tuesday, while oil benchmarks alternated between gains and losses for much of the Asian session, as fears of an economic slowdown in China and oversupply permutations returned to haunt the market.

Data from China’s General Administration of Customs, in US dollar terms, indicated that exports slipped 3.7% year-on-year in September, while imports fell 20.5% year-on-year. Although the data hinted at some softening in domestic demand last month, the decline in the headline rate was dragged down by the drop in global commodity prices.

At 1449 BST, the Brent front-month futures contract was trading 0.32% or 16 cents higher at $50.02 a barrel, while the WTI was up 0.62% or 29 cents at $47.39 a barrel as both benchmarks headed lower in Asian trading but recovered marginally later on in the European session.

Analysts at Barclays expect a moderation in Chinese oil demand growth over the fourth quarter, but not a slump as feared by some, noting that opportunistic storage-linked buying by Beijing “to fill commercial and strategic reserves could still provide support to the oil price.”

Meanwhile, base metals slipped in late afternoon trading on the London Metal Exchange. Past the midway point of trading, major LME three-month futures contracts of primary aluminium (down 3.1%), lead (down 1.8%), nickel (down 2.1%), tin (down 1.2%), copper (down 1.3%) and zinc (down 2.0%) were heading lower.

Precious metals trading remained lacklustre with only a modest uptick in prices. COMEX gold for December delivery was up 0.04% or 50 cents at $1,165.00 an ounce, while spot gold was 0.12% or $1.36 higher at $1,165.20 an ounce.

However, analysts at FXTM said gold could begin looking towards $1200-levels if US interest rate expectations continue to be pushed back as they happen to be at the moment. Spot platinum was $4.02 or 0.40% lower at $992.15 an ounce, while COMEX silver was 0.48% or eight cents higher at $15.94 an ounce.

Finally, headline agricultural commodities futures were largely in positive territory. CBOT corn (up 0.33%), wheat (up 1.48%), ICE cocoa (up 1.82%) and ICE cotton (up 0.15%) futures were all trading higher. However, CME live cattle (down 0.17%) futures took a marginal knock.