Commodities: Oil rises in European trading, metals back in negative territory

Oil was trading higher in Europe on Thursday, with base metals back in the red as concerns over China’s economic performance coupled with a stronger dollar dominated wider market chatter.

At 1621 BST, the Brent front month futures contract for September delivery was up 42 cents or 0.79% at $53.80 barrel, while WTI was up 24 cents or 0.49% to $49.03, and fast recovering from six-month lows.

A decline in US oil inventories on the previous week by 4.2m barrels provided traders to indulge in a bit of short-covering as the weekend approached. Meanwhile, precious metals continued on lacklustre patch, albeit posting a marginal recovery from recent lows.

COMEX gold for December delivery was broadly flat up 50 cents to $1,093.80 an ounce, while spot gold was down 0.40% or $4.39 at $1,092.46 an ounce. COMEX silver was trading at $14.76 an ounce, up 0.08% or a mere cent, while spot platinum was up $2.44 or 0.25% continuing its weak recovery.

Meanwhile, precious metals slipped back into the red with most economists remaining sceptical about China actually growing at 7%, despite claims to the contrary by Beijing. Past the midway point in trading on the London Metal Exchange, three-month contracts of primary aluminium (down 0.8%), copper (down 1.2%), lead (down 1.0%), nickel (down 1.9%), tin (down 1.5%) and zinc (down 1.1%) were all trading lower.

Michael Hewson, chief market analyst at CMC Markets, said, “Fears about the health of the Chinese economy have grown mainly as a result of not only the deterioration on the economic data, but also a sharp fall back in the demand for commodities in general over the past twelve months.”

“We’ve seen widespread declines in not only iron ore, copper and crude oil prices, but also sugar, corn and wheat prices in the last few months, raising concerns of a pronounced slowdown in the world’s second biggest economy.”

Finally, the agricultural commodities picture was much healthier relative to yesterday as CBOT corn and wheat futures recovered ground, rising 1.39% and 1.36% respectively. ICE cocoa (up 0.16%), cotton (up 0.11%) and CME live cattle (up 0.41%) was also marginally in the green.