Commodities: Oil down on oversupply sentiment, base metals trade lower in Europe

At 1335 BST, the Brent front month futures contract for July delivery was down 0.76% or 50 cents at $65.20 a barrel, while the WTI was trading at $60.86 down 57 cents or 0.93%. In a data submission to OPEC, heavyweight Saudi Arabia said its oil production rate for May came in at 10.33m barrels per day (bpd), up from 10.31m bpd the month before.

The country is currently accounting for nearly a third of OPEC’s output, which is officially close to 31m bpd, and around 31.5m bpd according various industry surveys. Alongside this, oil production in the US came in at 9.6m bpd last month and is not showing much signs of declining at the rate many had feared.

While the US Department of Energy believes production was likely to "generally decline" through early 2016, BP’s Statistical Review of World Energy revealed the US had overtaken Russia as the world’s largest producer of oil and gas last year.

Even though US oil inventories fell by the largest amount in almost a year, with 6.8m barrels trimmed off the circa 470m barrels that are currently stored stateside, support to the upside proved limited overnight.

Joshua Mahony, market analyst, IG, said: “US oil inventories fell by the largest amount in almost a year according overnight data. Nevertheless, despite falling US rigs, production continues to rise, forcing the likes of WTI and Brent southward. Given the recent resurgence of crude prices, it feels like the sellers are likely to come back into play soon and this announcement could mark that moment.”

Meanwhile, the precious metals market continues fluctuate. COMEX gold for August delivery was trading $9.10 or 0.77% lower at $1,177.50 an ounce, with analysts at IG predicting a likely move back to $1220 levels “in the coming weeks”.

Spot gold was trading a shade higher at $1,183.01 down 0.26% while spot platinum was down 0.63% or $7.08 at $1,108 an ounce. Comex silver for July delivery fell below $16 level, shedding 0.78% or 12 cents to $15.84 an ounce.

Base metals market was back in the red in European trading after a relatively stable, if not very profitable, session overnight. On the London Metal Exchange, copper took the brunt of uncertainty over China’s possible stimulus measures and lower imports by the world’s leading consumer of the base metal.

The metal's three-month delivery contract was down 2.2% or $130.25 at $5,919.50 per tonne. Three-month contracts of aluminium (down 0.8), lead (down 0.7%), nickel (down 0.9%), tin (down 1.8%) and zinc (down 0.2%) told the story of a downbeat session.

On the agricultural commodities front, except the CME live cattle contract (up 0.43%), most contracts were in the red, with CBOT corn (down 0.28%), CBOT wheat (down 1.17%), ICE cocoa (down 0.64%) and ICE cotton (down 1.22%) all trading lower.