Commodities: Oil, gold futures retreat on mixed US data

Oil and gold futures headed lower on Friday, along with much of the base metal complex, as weekend profit taking in Europe and mixed data from the US weighed on trading patterns.

At 1743 GMT, the Brent front-month oil futures contract was down 0.23% or eight cents to $34.38 per barrel, while WTI was down 0.88% or 28 cents to $31.44 per barrel.

US employers added 151,000 jobs, compared with consensus expectations for a 190,000 gain and a downwardly-revised 262,000 the previous month, according to the Labor Department’s non-farm payrolls data.

The unemployment rate fell to 4.9% from 5% in December, nearing an eight-year low. Economists had expected the rate to remain unchanged at 5%. Average hourly earnings rose 2.5% year-on-year in January, beating forecasts for a 2.2% increase.

Meanwhile, the US trade deficit expanded in December to a seasonally adjusted $43.36bn from the previous month’s $42.23bn as exports fell 0.3% and imports increased 0.3%. Analysts had expected a deficit of $43.20bn.

Elsewhere, German factory orders fell 0.7% in December compared to a month earlier, which was a steeper decline than the 0.5% expected by economists.

Analyst at Barclays said, “Headwinds are mounting for US production as hedges roll off, credit redeterminations near, and $30 oil and $2.30 gas begin to take their toll on producer cash flow. We forecast US crude oil production to average 9.0m barrels per day in 2016, down 460,000 barrels per day.”

Meanwhile, under a controversial proposal by US President Barack Obama, the country’s oil exploration and production companies would be asked to pay a tax of $10 (£6.85) on every barrel they extract. The White House said the tax would raise $20bn per annum to expand "national transit systems and invest in low-carbon technologies."

However, the proposal is highly unlikely to make it through the Republican-controlled Congress. It would also be unpopular with many voters, as adding $10 to the cost of oil production would drive up the cost of gasoline at the pump.

Headline base metal futures were largely in negative territory on the London Metal Exchange at 1635 GMT. Three-month futures contracts of copper (down 1.4%), nickel (down 2.9%), lead (down 2.3%) and zinc (down 2.4%) headed lower.

Liz Grant, senior account executive at Sucden Financial, said, “During the overnight Asian session, LME metals opened close to unchanged but moved lower through the session tracking oil and business was thin as we approach the Chinese New Year break.

“During the London morning prices traded narrowly but with a brief spike to the upside when LME warehouse stocks were released showing drawdowns across the board. However, LME prices edged lower through the afternoon led by nickel which hit sell stops through 8365 triggering a move to 8155.”

Precious metals saw the safe haven influenced uptick of the week fizzle out. On the COMEX, the front-month gold futures contract was down 0.03% or 30 cents to $1,157.30 an ounce, while spot gold was broadly flat at $1,157.33 an ounce. COMEX silver fell 0.57% or eight cents to $14.77 an ounce, while spot platinum fell 0.54% or $4.95 to $903.75 an ounce.

Finally, agricultural commodity futures were largely on a negative patch. CBOT corn (down 0.54%), wheat (down 1.37%), ICE cotton (down 0.22%) and CME live cattle (down 0.90%) headed lower in early trading calls stateside.