Commodities: Oil price decline continues, metals slip lower

Oil futures tumbled further with OPEC confirming on Thursday its production for November stood at 31.7m barrels per day, well above its published quota cap of 30m bpd.

In a scheduled monthly data release, the cartel revealed crude output rose by 230,000 bpd to 31.7m bpd last month and hiked its oil demand growth forecast for the current year by 30,000 bpd to 1.53m bpd.

However, OPEC left its 2016 growth forecast unchanged at 1.25m bpd. The organisation also predicted supply from non-OPEC members was likely to fall faster in 2016 than previously estimated, having grown faster than forecast this year.

At 1716 GMT, the Brent front month futures contract was down a further 0.87% or 35 cents at $39.76 per barrel, while the WTI was down 0.67% or 25 cents at $36.91 per barrel.

In response to the oil price decline, Fitch Ratings said the 2016 outlook for Gulf Cooperation Council (GCC) economies remained negative. "Oil price weakness is slowing economic growth and this is taking its toll on bank liquidity and earnings. Around 70% of the GCC's GDP is driven, direct or indirectly, by oil. Our 2016 Brent price forecast is $55 per barrel."

The ratings agency forecasts slower economic growth for most GCC member countries in 2016. “Kuwait is an exception where growth of 3.5% will be supported by strong public spending. We expect a notable economic slowdown in Saudi Arabia, where we forecast GDP growth falling to 1.9% in 2016 (2015: 4%), Qatar (2016 GDP growth: 3.7%; 2015: 4.3%) and Oman (2016: 2.7%; 2015: 3.4%). A modest downturn is forecast for Bahrain and Abu Dhabi.”

Away from the oil market, most metal futures headed lower during late afternoon trading in Europe. At 1330 GMT, three-month delivery contracts of primary aluminium (down 0.9%), tin (down 1.5%), lead (down 0.7%) and zinc (down 1.0%) were trading lower on the London Metal Exchange

The copper contract, still at historic lows, remained under pressure trading at $4,592.50 per metric tonne down 0.9%.

Precious metals complex remained under pressure with many traders pricing in a US interest rate hike. COMEX gold futures contract was down a further 0.29% or $3.10 to $1,073.40 an ounce, while spot gold was 0.04% or 38 cents higher at $1,073.16 an ounce. COMEX silver was down 0.27% or four cents to $14.15 an ounce, while spot platinum was down 0.65% or $5.57 to $863.53 an ounce.

Finally, agricultural commodity futures were on a mixed patch in early trading stateside. CBOT corn (up 1.07%), CBOT wheat (up 1.12%) and CME live cattle (up 1.53%) futures were trading higher, while ICE cotton (up 1.59%) and cocoa (up 0.47%) futures posted decent upticks.