Commodities: Oil marginally lower in Europe, base metals market sees uptick

Oil was trading marginally lower on Wednesday following on from the previous session which saw wild intraday swings in wake of Iran’s nuclear settlement.

Tuesday saw oil benchmarks fall in Asia on news of the settlement, which could potentially see additional Iranian oil on to an already oversupplied market. However, by mid-afternoon in Europe on Tuesday, oil had returned to previous levels trading above last Friday’s closing price of $58.71 per Brent barrel at one point.

At 15:33 BST, the Brent front month futures contract was down 93 cents or 1.39% at $57.58 a barrel while the WTI was down 1.47% or 78 cents at $52.26.

Even though fears of Iran flooding the oil market might be unfounded, the overall picture remains bearish with surplus production still in the 1.1m to 1.3m range as concerns over Chinese demand continue to lurk around. Analysts at Barclays noted that they did not believe the oil market would move markedly lower from here as a result of the Iranian agreement.

“We believe that the market will begin to adjust, whether through higher demand, or lower non-OPEC supply in the next couple years but only once Iran’s contribution and timing are made clear. For now, OPEC is already producing well above the demand for its crude, and this makes it worse,” they wrote in a note to clients.

“We do not expect the Saudis to do anything markedly different. Rather, they will take a wait and see approach,” they said in a note to clients,” Barclays analysts added.

Meanwhile, short-callers were all over the precious metals market, with COMEX gold for August delivery down 0.62% or $7.10 at $1146.40 an ounce, while COMEX silver was down 28 cents or 1.86% at $15.03 an ounce.

Spot gold was $7.07 or 0.61% lower at $1,148.99 lower while spot platinum was 0.59% or $6.04 down at $1,018.81 an ounce.

Things were a lot calmer in the industrial metals market with most major contracts posting an uptick in pricing levels. Past the midway point in trading on the London Metal Exchange, three-month futures contract of primary aluminium (up 1.5%), copper (up 1.7%), lead (up 1.7%), nickel (up 2.9%), tin (up 1%) and zinc (up 2.4%) were conveying a vastly improved picture.

Finally, on the agricultural commodities front, CBOT corn (up 0.23%) and CME live cattle (up 0.03%) were in the green. However, CBOT wheat (down 0.70%), ICE cocoa (down 0.30%) and cotton (down 0.71%) were trading lower on a mixed day for the market.