Commodities: Oil climbs, gold and copper slip while soybean market faces oversupply

Oil benchmarks continued to trade steadily in the green for the fourth successive session, on the back of industry forecasts predicting a drop in US shale production and lower rig count data.

Gold Spot

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At 07:06 BST on Wednesday, Brent crude was trading up 0.92% or 54 cents at $58.97 per barrel in Asian markets, while the WTI was up 0.64% or 34 cents at $53.63.

The US Energy Information Administration (EIA) recently noted that output from the country's seven shale regions was likely to fall by 57,000 barrels per day (bpd) in May. The forecast comes close on the heels of declining rig counts put out by Drillinginfo and Baker Hughes.

Gold continued lower but pared some losses overnight as the dollar shed value against a basket of currencies after lower US retail sales and output prices data. Nonetheless, global benchmarks as well as spot prices continued to lurk well below $1200 an ounce.

COMEX gold for June delivery was up $1.30 or 0.11% at $1,193.90 an ounce, while spot gold was $1.21 or 0.10% at $1193.99. Additionally, COMEX silver for May delivery was broadly flat at $16.18 an ounce.

Chris Beauchamp, Senior Market Analyst, IG, said: “Tuesday looked like another tough day for gold and silver but both these commodities have been given a lift thanks to that US retail sales report.

“The lack of a sufficiently large bounceback in the shopping habits of Americans meant that the report was filed in the ‘bearish economic data’ pile, and prompting a drop back in the US dollar as over-eager rate expectations were pared back once again.”

Meanwhile, copper hit a near four-week low overnight as concerns over lower Chinese demand persisted. Three-month London Metal Exchange Copper contract dropped to a low of $5,900 a tonne at one point on Tuesday; its weakest since 20 March.

However, it ended the session higher to close at $5,950 per tonne, down 0.7% as continued disruption at Chilean copper mines lent some support to prices.

Finally, soft commodities traders remain concerned about oversupply in the soybean market. While, the World Agricultural Supply & Demand Estimates report reduced the US soybean carryout number for last year by 15m bushels to 370m bushels, selected traders told ShareCast the level was still pretty high.

More so, South America’s soybean output was raised in the report by 36.74m bushels with Argentina and Brazil accounting for bulk of the rise.

Overnight, CBOT soybeans futures for May delivery closed at $9.602 per bushel, up 11.5 cents or 1.2%. However, in light of the latest crop output data, City commentators are predicting a drop to the $8-8.50 range for the November contract, which is currently trading around the $9.48 mark.

Elsewhere, CBOT corn and wheat contracts were down, while ICE cocoa and corn July delivery contracts were in the green.