Commodities: Oil, metals retreat on Chinese data

Oil and metal futures tanked on Tuesday, following disappointing data from China.

Statistics published earlier in the session suggested that Chinese trade surplus shrank far more quickly in February than anticipated, dipping from $63.3bn in January to $32.6bn, as exports registered a decline of 25.4% year-on-year, in comparison to the prior month's reading of -11.2% and market forecasts for a fall of 14.5%.

Traders took it as a cue to indulge in profit-taking as oil futures retreated right from the word ‘go’ in Singapore. At 1638 GMT, the Brent front month contract was down 2.28% or 93 cents to $39.91 per barrel, while the WTI fell 2.72% or $1.03 to $36.87 per barrel.

Chris Beauchamp, senior market analyst at IG, said, “Brent crude’s uptick above $40 did not last. Longer-term, the big problem for oil bulls is that the same driver that has pushed production caps will work in reverse if the price goes back towards $50, as producers see a chance to get wells moving again.”

Away from oil markets, precious metals headed lower as well, with the exception of the COMEX gold April futures contract which rose 0.22% or $2.80 to $1266.80 an ounce. Meanwhile, spot gold was down 0.08% or 53 cents to $1,266.80 an ounce.

COMEX silver fell 1.04% or 16 cents to $15.47 an ounce, while spot platinum also slid 0.90% or $8.97 to $1,001.66 an ounce; retreating well below the psychological $1,000 an ounce level that it had breached for the first time since October 2015.

Headline base metal futures headed lower across the London Metal Exchange board. At 1635 GMT, three-month futures contracts of primary aluminium (-2.7%), nickel (-6.2%), lead (-2.5%), tin (-5.9%), zinc (-2.0%) and copper (-2.8%) were on negative turf.

Liz Grant, senior account executive at Sucden Financial, said, " Disappointing Chinese trade data led to a reversal of Monday’s up moves for base metals. The rally in iron ore petered out and on the LME, copper failed to hold above 5000.

“Having seen a few days of good gains across the complex, a technical correction is not entirely surprising when looking at underlying fundamentals and lingering concerns over global growth prospects.”

Finally, agricultural commodity futures were on a mixed patch. CBOT corn (+0.91%), wheat (+0.43%) and CME live cattle (+0.72%) headed higher, but ICE cocoa (-1.10%) and cotton (-1.20%) contracts slipped in early trading calls stateside.