Commodities: WTI resists drop below $40, metals hammered in Europe

Oil benchmarks went sideways on Thursday as WTI futures resisted a drop below $40, while base metals took another hammering in European trading.

A relatively stronger dollar combined with oversupply concerns meant oil futures barely moved beyond their current range with WTI showing stubborn resistance above $40 per barrel. At 2300 GMT, the Brent front-month futures contract was up 0.10% or four cents to $44.18 per barrel, while the WTI was broadly flat at $40.54 per barrel.

Analysts at Capital Economics and Barclays, while having revised their average oil price predictions for 2016 downwards, seem to suggest a bottoming out of the market might be within sight. Meanwhile, Fitch Ratings said changes in global oil supply trends, including high Russian production, expected renewal of Iranian heavy crude exports and pressure on US shale oil output, may benefit European refiners.

“These trends could support a wider price differential between the Brent and Urals benchmarks and a narrower differential between Brent and the US West Texas Intermediate (WTI) benchmark, reducing the competitive advantage US refiners have over their European rivals,” the agency wrote in a note to clients.

Elsewhere, base metals were hammered on the London Metal Exchange. The three-month copper delivery futures contract shed another 0.5% to $4,612.50 per metric tonne, extending a succession of losses. Additionally, lead (down 0.4%), tin (down 0.9%), zinc (down 1.2%), aluminium (down 0.9%) and nickel (down 2.0%) remained in negative territory.

Liz Grant, senior account executive at Sucden Financial, said, “We had another day that saw base metal prices under pressure and turnover was low to moderate, as copper continued to flirt with $4,600 area. LME stocks were small, down across the board."

Precious metals were on a mixed patch, as US Federal Reserve minutes seen to be increasing the likelihood of an interest rate hike, stabilised trading with little movement either way. COMEX gold futures rose 0.30% to $1,081.10 an ounce, while spot gold was 0.04% or 42 cents lower at $1,081.79 an ounce. COMEX silver rose 0.09% or a cent to $14.24 an ounce, while spot platinum was broadly flat at $856.10 an ounce.

Finally, headline agricultural commodity futures were largely in positive territory. CBOT corn (up 0.54%), wheat (up 1.49%), ICE cotton (up 1.08%) and cocoa (up 0.29%) futures were up, but CME live cattle (down 1.31%) traded lower.