Commodities: WTI retains premium versus Brent

Oil futures stayed below $30 per barrel on Monday, with the US benchmark WTI retaining its premium to Brent over another volatile session.

At 1536 GMT, the Brent front-month futures contract was down 0.35% or 10 cents to $28.84 per barrel, while WTI fell 0.99% or 29 cents to $29.13 per barrel, retaining its premium to the global proxy benchmark as oversupply and the lifting of Iranian sanctions triggered further, albeit erratic, bursts of periodic short-selling.

Iran is expected to raise its oil exports by 500,000 barrels per day within the first few months of the international sanctions being lifted.

James Hughes, chief market analyst at GKFX, said, “The sanctions put in place by Europe and the US had previously cut Iran’s export capabilities by around 2m bpd, so the fear that the oversupplied market is going to be yet further hit is a very real one, and is pushing that $20 predicted bottom much closer, much quicker than expected.

“Brent oil has now totally outstripped the downside of WTI as overnight price saw the global proxy benchmark print a new $27 handle with WTI yet to break $28.”

Lower trading volumes were noted across the commodities spectrum with the US market closed for the Martin Luther King Day holiday. In the precious metals market, COMEX gold futures contract posted a dip of 0.10% or $1.10 to $1,089.60 an ounce, while spot gold was 0.02% or 26 cents higher at $1,089.14 an ounce.

Yann Quelenn, market strategist at Swissquote, said, “Gold keeps trading between hourly support at $1,046 [03/12/2015 low] and resistance at $1,113 [08/01/2016 high]. Yet, the short-term technical structure suggests a deeper upside move.

“In the long-term, the underlying downtrend continues to favour a bearish bias. A break of the resistance at $1,223 is needed to suggest something more than a temporary rebound.”

Away from gold, COMEX silver rose 0.32% or four cents to $13.94 an ounce, however spot platinum fell 1.12% or $9.29 to $820.06 an ounce.

Elsewhere, base metals were on a mixed patch during early afternoon trading on the London Metal Exchange. The three-month delivery futures contracts of copper (up 1.2%), primary aluminium (up 0.6%), nickel (up 1.9%), and zinc (up 0.2%) were trading higher, with lead (down 0.2%) and tin (down 1.4%) heading in the opposite direction.