Commodities: Oil futures resume slide, gold recovers

Oil futures resumed their slide on Tuesday, as Saudi Oil Minister Ali Al-Naimi said there was no prospect of production cuts.

Speaking at IHS CERA Week in Houston, USA, Al-Naimi restated his country’s case for “maintaining output” premised on demand picking up excess crude over the medium-term. Meanwhile, Nigeria has suggested it would be in favour of an oil production freeze initiative put forward by Saudi Arabia, Russia, Venezuela and Qatar last week but Iran described the idea as "ridiculous" after initially having welcomed the move.

At 1915 GMT, the Brent April futures contract was down 3.30% or $1.13 to $33.56 per barrel, while WTI was 3.7% or $1.25 lower at $32.14 per barrel.

Many reckon the oil market would rebalance towards the middle of the current year, but analysts from Morgan Stanley said the rebalancing may not come until mid-2017.

"Despite the myriad announcements of capital expenditure cuts, production has yet to respond enough to rebalance the market," the investment bank said in a note to clients.

Meanwhile, precious metals regained momentum. The COMEX front-month gold futures contract was up 1.01% or $12.20 at $1,222.30 an ounce, while spot gold was up 1.16% or $14.02 cents to $1,222.65 an ounce.

Spot platinum rose 1.48% or $13.75 to $941.83 an ounce, and COMEX silver rose 0.42% or six cents to $15.29 an ounce.

Headline base metal futures headed lower on the London Metal Exchange, with the notable exception of tin. At 1635 GMT, three-month futures contracts of nickel (down 1.6%), copper (down 1.3%), primary aluminium (down 1.7%) and lead (down 1.8%) headed lower.

Tin (up 1.6%) contract rose after Indonesian producer Bangka revealed closure of its smelter in response to a government drive to preserve the environment. The facility will become a conservation area thereby reducing Indonesia’s tin exports by nearly 14%. The development follows recent flood problems in the country that had already hampered exports.

Liz Grant, senior account executive at Sucden Financial, said, “With the exception of tin, Tuesday’s session saw LME prices in broad retreat following the rally seen across the board over the previous session as sentiment swings from positive to negative.”

“Nervousness over global growth prospects came into sharper focus again as base metal prices remained "soft" through the day with tin escaping a decline on account of the Bangka development.”

Finally, headline agricultural commodity futures were on a mixed patch. CBOT corn (down 1.54%), wheat (down 1.83%) and ICE cotton (down 1.18%) futures saw declines, while ICE cocoa (up 0.35%) and CME live cattle (up 0.80%) futures headed higher in early trading calls stateside.