Commodities: Oil, gold futures recover as dollar weakens

Oil futures returned to positive territory on Wednesday, while gold recovered and base metals went through another session marked by modest gains.

Earlier, the Energy Information Administration, statistical arm of the US Department of Energy, said the country’s crude oil inventories rose by 7.8m barrels in the last week, well above analysts' expectations for a rise of 4.8m barrels, as imports rose.

However, the data failed to halt an oil price recovery that began during the Asian session, as the US dollar weakened following lacklustre data and Russia reiterated its willingness to take part in talks with OPEC to cut production.

Russian Foreign Minister Sergei Lavrov said if there is consensus among the OPEC members and non-OPEC producers to meet, "then we will meet". At 1634 GMT, the Brent front-month futures contract was up 4.74% or $1.55 to $34.27 per barrel, while WTI was 5.09% or $1.52 higher at $31.40 per barrel.

While many reckon the oil market would rebalance towards the middle of the current year, analysts 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.

Base metal futures posted marginal gains across the London Metal Exchange board. At 1635 GMT, the much scrutinised three-month copper delivery futures contract was up 1.6% to $4,614.00 per metric tonne.

Concurrently, primary aluminium (up 1.2%), zinc (up 1.7%), lead (up 1.3%), nickel (up 0.9%) and tin (up 0.8%) contracts also headed higher. Precious metal contracts returned to positive territory as well, courtesy a weaker dollar and safe haven demand.

COMEX gold futures contract for April delivery rose 1.14% or $12.90 to $1,140.20 an ounce, while spot gold was 0.82% or $9.24 higher at $1,138.25 an ounce.

Peter Rosenstreich, head of market strategy at Swissquote, said “Gold continues to move higher. But in the long-term, the underlying downtrend continues to favour a bearish bias. A break of the resistance at $1,223 is needed to suggest something more than a temporary rebound.”

Elsewhere, COMEX silver futures rose 2.98% or 43 cents to $14.72 an ounce, while spot platinum rose 2.43% or $20.78 to $876.68 an ounce.

Finally, headline agricultural commodity futures were largely on positive turf. CBOT wheat (up 0.79%), ICE cotton (up 0.10%), cocoa (up 0.11%) and CME live cattle (up 1.11%) were on the up in early calls stateside, but CBOT corn (down 0.40%) headed lower.