Commodities: Oil rebounds as Brent-WTI spread narrows to naught

Oil futures reversed declines during early trading stateside on Tuesday, as the spread between both benchmarks - Brent and WTI - narrowed to zero, with the US marker recovering at a better rate than the global proxy standard.

At 1655 GMT, the Brent front-month futures contract was up 0.14% or five cents to $36.40 per barrel, not far from $36.06; its lowest level since July 2004. However, the WTI jumped 1.65% or 59 cents higher to equal Brent, for the first time since 15 January, at $36.40 per barrel.

Yann Quelenn, market strategist at Swissquote, said, “The medium-term technical structure remains clearly negative in a context of oil oversupply and is expected to show continued weakness. We see the session’s bounce as temporary.

“In the long-term, crude oil has not shown signs of recovery. Nonetheless, crude oil is holding way below its 200-day Moving Average [setting up at $50]. A very unlikely break of the resistance at 60.72 [noted back in July 2015] would confirm an underlying uptrend.”

Elsewhere, base metals had a mixed session with selected futures contracts trading up earlier in the session only to shed their intraday gains during late afternoon trading in Europe. The three-month copper delivery futures contract was down 1.0% to $4,687.00 per metric tonne at 1635 GMT on the London Metal Exchange. Additionally, primary aluminium (down 0.5%), nickel (down 1.9%), lead (down 0.7%) and zinc (down 1.2%) futures were also in negative territory.

Liz Grant, senior account executive at Sucden Financial, said, “LME prices moved to lower ground in thin pre-Christmas trading over the course of the session. Copper resumed its pivotal movement either side of $4,700. However, overall market turnover was very light.”

Meanwhile, the precious metals market uptick of recent sessions came to a grinding halt with the COMEX gold futures contract posting a marginal decline of 0.50% or $5.40 to $1,075.20 an ounce, while spot gold was 0.27% or $2.91 lower at $1,075.49 an ounce. Away from gold, COMEX silver fell 0.28% or four cents to $14.28 an ounce, while spot platinum fell 0.05% or 37 cents to $872.38 an ounce.

Finally, agricultural commodity futures also slid lower in early trading stateside. CBOT corn (down 0.47%), wheat (down 0.68%), ICE cotton (down 1.33%) and cocoa (down 0.06%) futures headed lower. However, CME live cattle futures bucked the trend inching up 0.65%.