Commodities: Oil futures remain on positive turf, but gold retreats

Oil futures posted decent upticks on Monday, but gold retreated as calm returned to the equities market.

According to US CFTC data for the week ending 9 February, speculators’ long positions in the WTI oil front-month contract rose by 1,152 contracts to 302,384 futures. Shorts, or bets that prices will decline, slipped 2.1%, as net-longs increased 5% to a three-month high. Yet, US stockpiles continue to remain at their highest level since 1930.

Last week, conflicting reports suggested Saudi Arabia might be willing to sign-up to a Venezuelan proposal that producer countries from the Organization of Petroleum Exporting Countries and those from outside ‘freeze’ their oil output at current levels, if Iran also signed up to such an agreement. However, no concrete move has emerged as yet.

At 1620 GMT, WTI was up 1.22% or 36 cents to $29.80 per barrel, while the Brent front-month oil futures contract was up 1.02% or 34 cents to $33.70 per barrel.

In a note to clients, analysts at Barclays said, “We expect WTI time spreads to widen further over the coming weeks, as Cushing [Oklahoma, US] storage utilisation rates rise. The rate of builds leading to April is likely to speed up first as US refinery runs fall on economic run cuts and seasonal maintenance. It could then slow as the severity of the supply cuts starts getting reflected.”

“Furthermore, as US supply declines, the second half 2016 could see WTI time spreads strengthen relative to Brent time spreads, a contrast to the current environment in which Brent time spreads are healthier.”

Meanwhile, gold continued to falter as traders booked profits and the COMEX remained closed for the President’s day holiday in the US. Dubai gold futures were down 1.2% or $15.10 at $1238.80 an ounce.

Selected base metal futures remained in positive territory on the London Metal Exchange, with China coming back online following its week-long Lunar New Year holiday break.

At 1635 GMT, three-month futures contracts of copper (up 1.7%), primary aluminium (up 1.1%) and nickel (up 5.9%) rose, but lead (down 0.1%), zinc (down 1.2%) and tin (down 1.3%) futures posted declines.