Commodities: Oil slips again, base metals and agricultural futures up

Oil benchmarks declined in European trading on Thursday, while metal and agricultural futures had a calmer session after China reset its guiding rate for the yuan lower for a third consecutive day, cutting the reference point further by 1%.

The move came after the People’s Bank of China initiated cuts of 1.6% and 1.9% on Tuesday and Wednesday respectively. The country’s bid to make the yuan exchange rate more market oriented follows a raft of disappointing economic data in recent months.

While both oil benchmarks were trading lower, the WTI was hit particularly hard, shedding 3% at one point and falling to a six-year low as Switzerland became the first country to lift sanctions on Iran since the nuclear deal.

At 1643 BST, the WTI front-month futures contract was down 2.29% or 99 cents at $42.32 a barrel, while Brent was trading lower by 1.41% or 70 cents at $48.96.

Jasper Lawler, analyst at CMC Markets UK, said, “Switzerland should be the first of many, which will help Iran continue to expand its oil output adding to the global supply glut.”

As Greece neared its bailout and the prospect of a US interest rate rise remained on the horizon, precious metals saw a correction in the face of declining safe haven demand. COMEX gold for December delivery was down 0.74% or $8.30 to $1,115.30 an ounce, while spot gold was down 0.75% or $8.48 to $1,115.19 an ounce, having risen for the past three sessions in a row.

Concurrently, COMEX silver was down 0.26% or four cents at $15.44 an ounce, while spot platinum retreated back below $1,000 level, shedding $6.20 or 0.62% down to $994.13 an ounce.

By contrast, industrial metals market saw a calmer session having priced in China’s move to devalue the yuan in the previous two sessions. At 1635 BST, trading on London Metal Exchange was fairly mixed with three-month futures contracts of lead (up 0.8%) and zinc (up 0.3%) trading marginally in positive territory.

However, primary aluminium (down 0.8%), copper (down 0.1%) and tin (down 0.3%) were marginally lower. Nickel, which shed 1.2% or $125 to $10,587.50 per tonne, was the biggest faller.

Calm also returned to the agricultural commodities market following a heavy sell-off over the previous session in wake of an unexpectedly upbeat corn production projection stateside by the US Department of Agriculture.

CBOT corn (up 0.95%), wheat (up 1.88%), ICE cocoa (up 0.82%) and cotton (up 2.12%) contracts were all in positive territory, while CME live cattle futures were broadly flat.