Commodities: Oil, gold recover but base metals market remains mixed

Oil and gold recovered on Wednesday, but selected base metals remained in negative territory for much of the session as China posted another set of disappointing data.

At 1605 BST, the Brent front month futures contract for October delivery was up 1.57% or 77 cents at $49.85 per barrel. Concurrently, the WTI was up 1.16% or 54 cents to $46.90 per barrel, with both benchmarks reversing much of the losses made over the previous session.

Precious metals returned to positive territory with COMEX gold for December delivery up 0.56% or $6.30 at $1,131.10 an ounce, while spot gold rose 0.62% or $6.97 to $1,131.73 an ounce.

COMEX silver was up 0.81% or 12 cents to $14.88 an ounce, but spot platinum continued lower, down 0.31% or $2.90 to $932.85 an ounce as the impact of the VW emissions scandal on platinum group metals (PGMs), which are an integral part of vehicle emissions systems, continues to impact trading.

Meanwhile, selected base metal futures fell further on the London Metal Exchange extending Monday’s declines on Chinese data. A survey of the country's manufacturing sector indicated it is shrinking at the fastest pace for over six years.

The preliminary Caixin China manufacturing purchasing managers' index (PMI) fell to 47 in September, below forecasts of 47.5 and down from 47.3 in August. A reading below 50 indicates contraction in the sector, while one above shows expansion.

Past the midway point of trading, LME’s three-month delivery contracts of primary aluminium (down 0.4%), copper (down 0.4%) and tin (down 0.1%) remained in negative territory. However, lead (up 0.6%), nickel (up 1.3%) and zinc (up 2.8%) futures rose in afternoon trading.

Analysts at HSBC see a recovering copper price trajectory, albeit slower than before. “The copper demand outlook has deteriorated but supply constraints will keep the copper market in balance/deficit going forward, in our view.

“We lower our outward base case global copper demand growth assumptions to 2.3-2.5% (from 3.0-3.5%), including Chinese demand of 3.1%/3.0% in 2015/16e from 7.3% in 2014,” they said in a note to clients.

Finally, agricultural commodities futures were also in mixed territory. CBOT corn (up 0.46%), wheat (up 2.32%) and ICE cotton (up 0.23%) futures were up, but ICE cocoa (down 0.39%) and CME live cattle (down 2.05%) futures were seen heading lower.