Commodities: Oil futures hold firm above $40/bbl as Doha talks draw near

Global oil benchmarks steadied above the $40 per barrel level on Monday, as crucial talks between OPEC and non-OPEC crude producers scheduled in Doha, Qatar for 17 April drew market chatter.

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. Long calls dominated intraday, as both Brent and WTI touched four-month highs, with anecdotal evidence of traders also pricing in a US production decline.

Last Wednesday, the US Department of Energy’s data arm – Energy Information Administration – 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.

Crude stocks at the US oil delivery hub of Cushing, Oklahoma, rose 357,000 barrels, the EIA added. Concurrently, crude imports fell by 446,000 barrels per day, owing to weather issues in the Houston Ship Channel last week. Fresh data is due later in the week.

At 1740 BST, the Brent June contract was up 1.81% or 76 cents to $42.70 per barrel, while the WTI May contract was 1.56% or 62 cents higher at $40.34 per barrel.

Jasper Lawler, market analyst at CMC Markets, said, “Oil traders are looking through additions to the supply glut by OPEC’s second biggest producer Iraq ahead of the producer meetings in Doha. There appears to be a lack of conviction to sell ahead of next week’s producer meeting in case somehow Saudi Arabia and Russia can pull an output freeze out of the hat.”

Away from oil markets, precious metals continued to post upticks. The COMEX front-month gold futures contract was up 1.28% or $15.90 at $1,259.70 an ounce, while spot gold was up 1.43% or $17.74 to $1,258.43 an ounce.

COMEX silver rose 3.58% or 55 cents to $15.94 an ounce, while spot platinum rose 2.21% or $21.35 to $989.05 an ounce.

Base metal futures saw a mixed afternoon on the London Metal Exchange. At 1635 GMT, three-month futures contracts of nickel (flat) and tin (+0.5%) were up, but others including lead (-0.7%), copper (-0.1%), zinc (-1.0%) and primary aluminium (-0.5%) headed lower.

Liz Grant, senior account executive at Sucden Financial, said, “Pretty quiet start to the new week with LME trading activity largely routine and price action "mixed", lacking clear direction and in low/moderate turnover with no significant economic data released.”

Finally, agricultural commodity futures were on a mixed patch. CBOT corn (-1.59%), wheat (-2.93%) and CME live cattle (-0.34%) registered declines, while ICE cotton (+1.00%) and cocoa (+1.49%) futures headed higher in early trading calls stateside.