Commodities: Oil futures recoup losses, base metals head lower

Oil futures recouped losses late on Thursday, while base metals saw lacklustre trading in Europe.

At 1710 BST, the Brent front month futures contract was up 1.04% or 41 cents to $39.67 per barrel, while WTI futures traded higher by 0.65% or 25 cents at $38.57 per barrel, having spent much of the Asian session and most of European intraday trading in negative territory, on expectation of rising supplies from Iran and bearish US inventory data published overnight.

Jasper Lawler, analyst at CMC Markets, said, “The price of oil rebounded supported by another drop in the dollar. Nonetheless, Brent crude remains near the bottom of a $3 trading range that’s been in place since breaching $40 per barrel.

“Overnight, another build in US weekly crude inventories spooked oil traders into retreat, prompting fears that the WTI contract has put in a short-term top at $40 per barrel.”

While oil futures rose marginally, three-month base metal futures tumbled on the London Metal Exchange with the exception of primary aluminium (+1.2%). At 1635 BST, other major headline contracts including copper (-0.3%), lead (-1.5%), nickel (-0.9%), tin (-0.3%) and zinc (-0.4%) headed lower.

Liz Grant, senior account executive at Sucden Financial, said, “LME prices remained "soft" through the morning session, led by copper and nickel as oil and equities retreated. The dollar was also weaker, but once again did little to support commodities in early trading as concerns over the global economy and China in particular come back into focus.”

“Prices recovered during the afternoon session, coinciding with the opening of the SHFE night session but this move was short lived as the market resumed its drift to lower levels in a dull end to the quarter.”

Elsewhere, precious metals registered decent gains on a weaker dollar, with the COMEX gold futures contract for June delivery up 0.58% or $7.10 to $1,235.70 an ounce. Spot gold was also up 0.58% or $7.11 at $1,232.13 an ounce. Concurrently, COMEX silver rose 1.28% or 19 cents to $15.41 an ounce, while spot platinum was up 1.77% or $17.07 to $979.55 an ounce.

Finally, major agricultural commodity futures were largely in negative territory. CBOT corn (-3.41%), ICE cotton (-0.57%) and cocoa (-0.81%) futures traded lower. However, CBOT wheat (+0.75%) and CME live cattle (+0.04%) bucked wider trends to post upticks.