Commodities: Oil, gold falter but base metals up in European trading

Oil and gold futures posted declines on Monday, while base metals recovered as a Chinese official claimed the worst was over in relation to the country’s recent equities selloff.

Zhou Xiaochuan, governor of the People's Bank of China, said he expected Chinese markets to become “more stable”, adding the correction in the stock market was “almost done”.

However, despite the Xiaouchuan’s optimism, the Shanghai Composite moved in tight ranges for most of the session and closed down 2.52%. Nonetheless, base metal futures continued to firm up on the London Metal Exchange, extending marginal gains achieved last week.

Past the midway point of trading on the LME, three-month delivery contracts of copper (up 0.5%), lead (up 0.7%), nickel (broadly flat), and zinc (up 0.3%) were all in positive territory. However, primary aluminium (down 0.09%) and tin (down 1.2%) traded lower against the wider market trend.

Meanwhile, much of the precious metals market was in negative territory, dragged lower by a decline in safe haven demand. At 1541 BST, COMEX gold for December delivery was down 0.28% or $3.10 at $1,118.30 an ounce, while spot gold was down 0.21% or $2.37 at $1,119.48 an ounce.

COMEX silver was down 0.41% or six cents at $14.49 an ounce, while spot platinum was 0.30% or $3 lower at $1,012.82 an ounce.

Elsewhere, oil benchmarks began the trading week in negative territory as a volatile market struggled to find direction. The Brent front month futures contract was down 2.18% or $1.08 cents to $48.53 per barrel, while the WTI was down 1.95% or $0.90 at $45.15 per barrel.

Crude oil production in the North Sea and Nigeria, rising to a three-year high, coupled with the possibility of Iran sanctions being lifted as early as the first quarter of 2016, put further pressure on oil prices during the European session.

Expecting oil markets to stay on a rocky patch, Jasper Lawler, analyst at CMC Markets, said, “Iran has been gearing up production ready for export once sanctions are lifted, today announcing it is ready to export 200,000 barrels per day to Spain, adding to market pressure.”

Finally, major agricultural commodities futures conveyed a mixed picture. CBOT corn (up 0.41%), wheat (up 0.54%) and ICE cocoa (up 1.73%) futures traded higher. However, ICE cotton (down 0.22%) and CME live cattle (down 0.79%) were marginally in negative territory.