Commodities: Oil futures extend upticks, base metals rally

Global oil benchmarks extended their run above $40 per barrel level on Tuesday, riding high on the approaching crucial talks between OPEC and non-OPEC crude producers scheduled for 17 April in Doha, Qatar.

Long calls dominated intraday trading for a second successive session, as both Brent and WTI futures remained at four-month highs. OPEC member Iran has so far refused to attend the meet, but Kuwait has expressed the opinion that a deal to freeze production could be achieved without Tehran’s backing.

There is also anecdotal evidence of traders pricing in a US production decline. The country’s Department of Energy’s data arm – the Energy Information Administration (EIA) – is due to publish its latest crude oil inventory report on Wednesday.

Last week, the EIA said the country’s crude inventories fell 4.9m barrels in the week to 1 April, compared with analysts' expectations for an increase of 3.1-3.3m barrels.

The dollar index breaking technical support at 94 to hit its lowest since August also played its part in the oil price bounce. At 1701 BST, the Brent June contract was up 3.92% or $1.68 to $44.51 per barrel, while the WTI May contract was 3.54% or $1.43 higher at $41.79 per barrel.

Jasper Lawler, market analyst at CMC Markets, said, “The price of oil added to early gains on unconfirmed rumours that Russia and Saudi Arabia have reached an agreement to freeze production.”

“The agreement has theoretically been in place since 16 February; it’s the details of quotas and the involvement of other countries, notably Iran that is yet to be resolved.”

Away from oil markets, precious metals had a dull session. The COMEX front-month gold futures contract was up a mere 0.03% or 40 cents at $1,258.40 an ounce, while spot gold was down 0.21% or $2.69 to $1,255.19 an ounce.

COMEX silver rose 1.00% or 16 cents to $16.14 an ounce; being the best performing precious metal of the session, while spot platinum rose 0.21% or $2.08 to $991.93 an ounce.

Headline base metal futures rallied on the London Metal Exchange. At 1635 GMT, three-month futures contracts of nickel (+1.7%), tin (+1.0%), lead (+1.2%), copper (+1.5%), zinc (+4.0%) and primary aluminium (+1.5%) registered substantial upticks.

Liz Grant, senior account executive at Sucden Financial, said, “After a slow and subdued overnight Asian session, LME prices gathered momentum through the London day as a technical rally was triggered, helped by the weakening dollar.

“As stops were triggered, copper cleared $4,700 moving up to $4,756 in the afternoon session and $4,765 by the close. Turnover was moderate/high and trading conditions were choppy at the higher levels as the short-covering gained traction.”

Finally, agricultural commodity futures were largely in positive territory in early US trading. CBOT corn (+1.05%), wheat (+1.45%), CME live cattle (+0.16%) ICE cotton (+1.24%) and cocoa (+0.75%) futures headed higher in early trading calls stateside.