Commodities: Oil retreats further, precious metals bounce back

Oil futures extended declines on Tuesday, on the back of an Iran-inspired price pullback while precious metals staged a recovery following a lacklustre start to the week.

At 1745 BST, the Brent front month futures contract was broadly flat or up a cent at a three-week low of $37.70 per barrel, having registered losses for much of the European session. WTI futures mirrored the pattern but were also broadly flat at $35.70 per barrel.

The predictive $40 per barrel price bottom was firmly breached after Iranian oil minister Bijan Zanganeh told the Mehr News agency over the weekend that Tehran would continue increasing its production and exports. His remarks came ahead of an oil producers’ conference in Doha on 17 April that Iran has decided not to attend.

Last Friday, Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman told Bloomberg: “If all countries agree to freeze production, we will be among them.”

He added that Iran needed to be among those countries “without a doubt” raising fears of oversupply and tussle for market share between the Saudis and Iranians.

Jasper Lawler, analyst at CMC Markets, said, “The price of oil chopped between gains and losses as traders mulled the chance of an agreement to freeze production at the upcoming meeting in Doha.

“Iran, one of the world’s largest producer when at full capacity, has shown a determination not to freeze production and the Saudi’s appear unwilling to take any action without Iran.”

Away from oil markets, precious metals reversed the previous session’s losses as the dollar weakened further against the yen. The COMEX gold June futures contract rose 0.90% or $11.01 to $1230.30 an ounce, while spot gold was down 1.14% or $13.87 to $1,229.30 an ounce.

COMEX silver rose 1.24% or 19 cents to $15.13 an ounce, while spot platinum also rose 0.91% or $8.57 to $950.32 an ounce.

Headline base metal futures saw lacklustre trading across the London Metal Exchange board. At 1635 BST, three-month futures contracts of primary aluminium (-0.8%), lead (-0.3%), tin (-1.1%) and copper (-0.2%) were marginally in negative territory.

Liz Grant, senior account executive at Sucden Financial, said, "It was another relatively quiet day on the LME with prices continuing to drift with little momentum in either direction, in generally thin conditions. On the spreads, some lending was evident in aluminium ahead of the index “roll” period and CTA selling appeared to be adjusted to June.”

Finally, agricultural commodity futures saw a mixed start to the US session. CBOT corn (+0.42%) and ICE cocoa (+0.24%) futures headed higher, while ICE cotton (-0.51%), CBOT wheat (-0.07%) and CME live cattle (-1.98%) futures slipped in early trading calls stateside.