Commodities: Saudi pulls out all the stops, oil futures gain

Fresh gains for crude oil futures after non-OPEC countries agreed to slash their own output levels kept commodities in the black despite a down day for the greenback on foreign exchange markets.

Brent crude oil futures for delivery in February advanced 1.98% to $55.43 per barrel on NYMEX after eleven non-OPEC producers cut a deal to reduce their combined output by 558,000 barrels a day starting in 2017.

Nonetheless, oil futures ended the session well off their intraday highs.

That, analysts said, was more than many observers had expected even if it fell modestly short of the 600,000 reduction the cartel had asked for.

Helping to butress sentiment, Saudi Arabia´s oil minister Khalid al-Falih said: "I can tell you with absolute certainty that effective Jan. 1 we’re going to cut and cut substantially to be below the level that we have committed to on 30 November."

At the cartel´s last meeting, Saudi had pledged to reduce production from 10.7m b/d to 10.06m b/d.

That, Morgan Stanley said, meant Saudi was eliminating one of its previous 'red lines'.

"In case of full compliance, market could be balanced as early as 1Q17, with stocks drawing thereafter," Morgan Stanley added.

Worth noting, data from Baker Hughes published on 9 December revealed that the number of US onshore oil rigs in operation increased by 21 to 498 during the latest week, the largest increase since July 2015.

Despite the above, weakness was evident in some corners of the energy patch such as in natural gas futures.

Natural gas futures for delivery in January on NYMEX dropped 6.38% to $3.51/MMBtu.

Overall, Bloomberg´s commodity index edged up 0.04% to 88.18 even as the US dollar spot index slipped 0.68% to 100.9.

Trading in metals was mixed, with copper futures on COMEX giving back 1.08% to $2.6190 a pound, even as iron ore and steel rebar prices made gains in overnight trading on Shanghai.

March 2017 silver futures also ended on an up note, advancing 1.30% to $17.19/oz..

Agricultural commodities were mostly higher, with ICE-traded cocoa futures rising 3.23% to $2,240 a metric tonne, while live cattle futures added 2.19% to $1.1295 a pound.

Coffee C futures on ICE tacked on 1.8% to $1.3805 a pound.