Commodities: Oil futures see mixed fortunes, gold and base metals recover

Oil benchmarks endured a mixed session on Tuesday, while gold and base metal futures recovered in European trading.

At 1601 BST, the Brent front month futures contract was up 2.14% or $1.02 at $48.65 per barrel, while the WTI was down 1.48% or 68 cents at $45.37 per barrel. Stronger German export figures, and China’s trade data not coming in at a worse than expected level provided support to Brent, deemed to be the global proxy benchmark.

However, the WTI got no such respite with adequate crude oil inventories stateside despite one or two Wall Street murmurs of an expected decline over the fourth quarter of this year. According to latest data, US stock holdings rose 4.67mn barrels for the week ending 28 August.

Myrto Sokou, senior research analyst at Sucden Financial said: “We expect WTI front month futures to hold support near the recent low at $37.75 per barrel (August’s low) in the short-term as bearish oil fundamentals and Chinese slowdown continue to weigh on sentiment.

“Brent front month futures are likely to track the general downside momentum in the short-term with possible consolidation near the $44-$52 level, while support holds near the recent low at $42.23."

Meanwhile, precious metals returned to positive territory although the uptick was marginal in the case of gold. COMEX gold for December delivery was up 0.27% or $3.00 at $1,124.40 an ounce, while spot gold was up 0.57% or $6.38 at $1,125.73 an ounce with traders expecting mixed trading patterns until the possibility of a September US interest rate rise by the Federal Reserve eases off completely.

Elsewhere, COMEX silver was up 1.83% or 27 cents to $14.82 an ounce, while spot platinum was up 2.08% or $20.58 to $1,008.73 an ounce. Base metal futures continued to firm up on the London Metal Exchange, extending marginal gains achieved over the previous European session.

Past the midway point of trading on the LME, three-month delivery contracts of primary aluminium (up 0.03%), copper (up 1.6%), lead (up 1.0%), nickel (up 0.5%), tin (up 1.6%) and zinc (up 1.2%) were all in positive territory.

Of all base metal contracts, gains posted by copper were the strongest. Traders attributed the base metal uptick to commodities major Glencore’s announcement of cost cuts on Monday. The company specifically said copper production at its Katanga and Mopani prospects in Democratic Republic Congo and Zambia maybe cut in response to the "challenging environment."

Sentiment of their combined production, at 127,000 mt per annum, being cut lent support to copper prices for much of the Asian and European trading sessions.

Finally, major agricultural commodities futures were in positive territory. CBOT corn (up 0.83%), wheat (up 1.02%), ICE cocoa (up 1.61%), cotton (up 0.93%) and CME live cattle (up 0.32%) contracts were all in positive territory over an upbeat session for the market.