Commodities: Oil futures recover as precious metals retreat

Oil futures recovered on Wednesday following a decline in US inventories, but precious metals retreated as US Federal Reserve Chairwoman Janet Yellen delivered her semi-annual testimony to the country’s Congress on US monetary policy.

Yellen said the slowdown in China could weigh on the US and the outlook for the country's inflation is falling. “Financial conditions in the US have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar,” she added.

At 1724GMT, on the COMEX, the front-month gold futures contract was down 0.38% or $4.60 to $1,194.00 an ounce, while spot gold was up 0.24% or $2.82 to $1,191.95 an ounce. COMEX silver fell 1.35% or 21 cents to $15.24 an ounce, while spot platinum fell 0.01% or seven cents to $903.75 an ounce.

Headline base metal futures were largely in positive territory on the London Metal Exchange at 1635 GMT. Three-month futures contracts of copper (up 0.5%), lead (up 1.3%), zinc (up 2.0%) and primary aluminium (up 0.5%) headed higher, but nickel (down 0.9%) faltered.

Liz Grant, senior account executive at Sucden Financial, said “LME trading volumes were very low compared to the previous session and business was thin with most Chinese traders still away. Price movements were “choppy” and nervous as the market seeks clearer direction.”

Meanwhile, oil prices saw a marginal recovery after the Energy Information Administration – statistics arm of the US Department of Energy – reported commercial crude inventories fell by 754,000 barrels to a total of 502m barrels last week. Market expectations were in the region of 3.6-3.7m barrels.

However, crude oil stocks at the country’s storage hub of Cushing, Oklahoma hit a new record last week after rising 523,000 barrels to 64.7m barrels. Additionally, US weekly commercial crude oil imports fell to 7.1m barrels per day from 8.3m bpd recording the biggest week-on-week decline last week since December 2014.

At 1743 GMT, the Brent front-month oil futures contract was up 3.76% or $1.14 to $31.46 per barrel, while WTI was up 0.54% or 15 cents to $28.09 per barrel.

Finally, agricultural commodity futures were on mixed turf. CBOT corn (down 0.54%) and ICE cocoa (down 0.84%) futures headed lower, while CME live cattle (up 0.48%), CBOT wheat (up 0.93%) headed higher, and ICE cotton stayed broadly flat.