Commodities: Oil retreats, base metals continue recovery run

Oil benchmarks shed overnight risk driven gains to trade lower on Wednesday, while base metal futures extended the previous session’s recovery.

At 1707 GMT, the Brent front-month futures contract was down 1.30% or 60 cents to $45.52 per barrel, having traded above $46 for much of the previous session. Meanwhile, WTI was 0.91% or 39 cents lower at $42.48 per barrel, as both benchmarks shed gains made in wake of tensions in the Middle East overnight, with oversupply sentiment returning to hound the market.

Mike van Dulken, Head of Research at Accendo Markets, said, “We’ve seen Brent’s overnight gains meet resistance, potentially giving up as much as a dollar today. WTI, meanwhile, is testing 48 hour rising lows having failed to break Tuesday’s highs. The issue of oversupply remains in the driving seat with geopolitics contributing little except short-term volatility.”

Meanwhile, base metals extended gains in late afternoon European trading. On the London Metal Exchange, three-month delivery contracts of primary aluminium (up 0.9%), nickel (up 3.6%), zinc (up 0.3%) and lead (up 0.8%) posted decent upticks. However, the copper contract, trading at six-year lows, was broadly flat at $4,572.00 per metric tonne.

Liz Grant, senior account executive at Sucden Financial, said, “Price activity was “mixed” but remained well above the lows seen at the beginning of the week as the market attempts to consolidate. Copper held above 4,500 and most of the metals were contained within the trading range of yesterday.”

“Chinese nickel producers are due to meet in Shanghai on Friday to discuss possible measures to deal with the current low prices and three-month nickel traded up to 8930 as short covering continued.”

Precious metals also saw marginal declines. COMEX gold futures contract fell 0.17% or $1.80 to $1,071.50 an ounce, while spot gold was 0.34% or $3.67 lower at $1,071.98 an ounce. COMEX silver was down 0.23% or three cents to $14.16 an ounce, but spot platinum was broadly flat at $843.55 an ounce.

Finally, agricultural commodity futures remained on a mixed patch in early trading stateside. CBOT wheat (down 0.05%) and ICE cocoa (down 0.84%) traded marginally lower. Meanwhile, CBOT corn (up 0.54%), ICE cotton (up 2.21%) and CME live cattle (up 0.47%) futures were on the up.