Commodities: Oil futures remain at six-year lows ahead of OPEC meeting

Oil benchmarks continued to lurk near six-year lows on Thursday, ahead of the OPEC ministers meeting in Vienna, Austria, while metals extended losses for much of the afternoon.

At 1552 GMT, the Brent front-month futures contract was up 1.77% or 75 cents to $43.24 per barrel, while WTI was up 1.05% or 42 cents to $40.36 per barrel, with oil oversupply concerns continuing to dominate market chatter as OPEC ministers convened. Since cartel heavyweight Saudi Arabia continues to suggest it is not in favour of a production cut, the market appears to be pricing in a no-change scenario at OPEC.

“Any lingering speculation of an oil production cut from OPEC’s official 30m barrels per day quota is likely to be disappointed, as Saudi Arabia seems content to wait for lower non-OPEC supply and stronger demand to lift prices next year,” said analysts at Capital Economics.

Barclays also expects OPEC member countries not to agree to any production cuts. “Though OPEC gets passing grades on the slowdown in non-OPEC supply, the global demand acceleration, and a higher market share, its revenue challenge will mount next year when some previously disrupted supply returns,” it said.

The bank cut its Brent and WTI price forecasts by $3 to $60 and $56 per barrel, respectively. “While starting from a lower base price level in December, we continue to expect fundamental supply drivers to tighten the market balance, bringing global supply and demand in line by the fourth quarter 2016 and bringing Brent back to $65 in the second half 2016,” the bank’s analysts added.

Elsewhere, base metals saw flat to negative trading on the London Metal Exchange. The three-month copper delivery futures contract registered a 1.4% slump to $4,516.50 per metric tonne, staying within range of six-year lows, as Chinese producers opted to introduce 200,000 metric tonnes of production cuts and Chile, the world’s largest producer of copper announced its intention to focus on cost cuts rather than production cuts last month.

Additionally, lead (down 0.8%), tin (down 3.4%), zinc (down 1.7%) and nickel (down 1.5%) futures also traded lower, while primary aluminium came in broadly flat in late afternoon trading.

COMEX gold futures rose 0.14% or $1.50 to $1,055.30 an ounce, while spot gold was 0.20% or $2.15 higher at $1,055.85 an ounce. COMEX silver fell 0.31% or four cents to $13.97 an ounce, while spot platinum rose 1.21% or $10.10 to $841.55 an ounce.

Finally, headline agricultural commodity futures were in positive territory. CBOT corn (up 1.15%), wheat (up 2.62%), ICE cocoa (up 1.35%) and cotton (up 0.55%) contracts notched up decent gains in early trading stateside.