Commodities: Oil prices slide as US plans to sell down strategic oil reserve

Oil prices slipped lower on Tuesday afternoon as the US government signed off on a deal to sell millions of barrels of crude from its Strategic Petroleum Reserve from 2018 until 2025 to raise cash.

The deal was reached on Monday night by the White House and lawmakers from both parties. The proposed sale equates to more than 8% of the 695 million barrels of reserves, held in four sites along the Gulf of Mexico coast.

Also weighing on the sector, BP said it was slashing costs to prepare for a long-term low price environment as it reported a sharp fall in third quarter underlying replacement cost profit. The company is now planning for around a $60 per barrel price for Brent crude until at least 2017.

Brent crude futures fell 1.4% to $46.88 per barrel and West Texas Intermediate dropped 1.9% to $43.12 per barrel at 1556 GMT.

Natural gas prices also dropped below $2 per MMBtu, the lowest level since 2012, early in the session before rising back to at $2.11. The November contract fell almost 10% in the previous session on forecasts of warmer winter weather.

Among metals, Comex gold (+0.20%), silver (0.13%) and copper (0.57%) were higher amid reports the People’s Bank of China is considering further stimulus measures after announcing rate cuts. Spot platinum, however, was down (-0.54%).

London Metal Exchange three-month future contracts were mixed including primary aluminium (-0.7%), copper -0.1%), lead (-0.2%), nickel (+0.4%), tin (-0.6%) and zinc (0.3%).

Agricultural commodities were also mixed: CBOT corn (-0.72%), wheat (+0.59%), ICE cocoa (+0.22%), cotton (+1.43%) and CME live cattle (-1.06%).

Looking ahead, the Federal Reserve’s announcement on interest rates on Wednesday will be in focus. Analysts expect no change but all eyes will be on the press release for hints of the timing of the first rate hike in almost a decade.