Commodities: Oil futures continue upward momentum, metals head lower

Oil futures headed higher with Brent capping the $53-level on Thursday, as supply correction sentiment and rising tensions in the Middle East lent support to prices, while precious metals saw lacklustre trading in Europe yet again.

At 1900 BST, the Brent front month futures contract was up 3.47% or $1.78 to $53.11 per barrel extending the previous session’s rally further. WTI futures, up 3.37% or $1.61 to $49.42 per barrel, followed Brent in extending an uptick overnight with the US Energy Information Administration suggesting earlier in the week that the country’s oil production rate would moderate over the course of 2016.

Tensions in the Middle East over Russia’s entry into the Syrian conflict escalated after four Russian cruise missiles fired at Syria from the Caspian Sea landed in Iran, the BBC reported citing US officials.

Meanwhile, political and analytical support to remove the US crude oil export ban is growing with the Senate Banking Committee passing a bill to do so last week. Analysts at Barclays noted, “The House of Representatives may pass legislation in early October, while two Senate bills with extra incentives for the Obama Administration are under consideration.

“Without more Senate Democrats and support from the White House, these initiatives may well fail amid growing partisanship. Given the noise of the election cycle in 2016 and a changed market landscape, the ban could remain in place until January 2017 at the earliest.”

While oil spiked, base metal futures tumbled on the London Metal Exchange ending the previous session’s broader uptick. At 1635 BST, three-month delivery contracts of primary aluminium (down 1.2%), copper (down 1.8%), lead (down 0.6%), nickel (down 0.8%), tin (down 0.2%) and zinc (down 1.8%) were in negative territory.

Elsewhere, gold markets saw a second successive session of modest losses with COMEX gold for December delivery down 0.24% or $2.80 to $1,145.90 an ounce, while spot gold was down 0.29% or $3.34 at $1,142.20 an ounce. Concurrently, COMEX silver was down 2.23% or 36 cents at $15.74 an ounce, but spot platinum was up 0.29% or $2.75 to $948.63 an ounce.

Finally, major agricultural commodities futures were firmly in negative territory. CBOT corn (down 1.01%), wheat (down 1.21%), ICE cotton (down 0.62%) and cocoa (down 0.68%) futures traded higher.