Commodities: Oil up on geopolitical tension, metals recover

Oil benchmarks escaped recent oversupply concerns on Tuesday to post upticks following geopolitical tensions in the Middle East, while metals recovered on short covering after massive overnight declines.

At 1637 GMT, the Brent front-month futures contract was up 3.03% or $1.36 to $46.19 per barrel. Meanwhile, WTI was 2.87% or $1.20 higher at $42.95 per barrel, as a Russian jet was shot down by two Turkish jets after allegedly not heeding requests to leave Turkish airspace near the Syrian border.

Jasper Lawler, analyst at CMC Markets, said, “Oil has risen for a second day and is up over 6% this week after staging a strong reversal on Monday following Saudi Arabia’s recommitment to do what it can to support the oil market. For the time being the threat of terrorism and Russia-Turkey tensions are preventing another downdraft.”

Meanwhile, base metals recovered from overnight declines in late afternoon European trading. The three-month copper delivery futures contract rose 2.2% to $4,578.00 per metric tonne on the London Metal Exchange. Additionally, primary aluminium (up 0.2%), nickel (up 4.0%), zinc (up 2.9%) and lead (up 2.2%) futures posted upticks as well.

Ongoing geopolitical tension also boosted safe haven demand for precious metals lending modest support to prices. COMEX gold futures contract rose 0.80% or $8.50 to $1,075.10 an ounce, while spot gold was up 0.68% or $7.26 lower at $1,076.44 an ounce. COMEX silver was up 1.45% or 20 cents to $14.27 an ounce, but spot platinum was down 0.42% or $3.57 at $841.68 an ounce.

Liz Grant, senior account executive at Sucden Financial, said, “Increase in Middle East tensions led to a quick move up in gold to $1080 area. LME metals were firmer across the board as light buying and short covering kick-started a rally during the Asian session which set the tone for the day.”

Finally, agricultural commodities futures were on mixed patch in early trading stateside. CBOT corn (down 0.67%), wheat (down 1.31%) and and CME live cattle (down 1.25%) were trading lower, but ICE cocoa (up 1.06%) and cotton (up 0.49%) futures were on the up.