Commodities: Oil futures slide below $30, gold sees modest uptick

Oil futures tumbled below $30 per barrel for the first time since 2003, while precious metals registered modest rises during late afternoon trading in Europe.

At 1651 GMT, the Brent front-month futures contract was down 4.27% or $1.32 to $29.56 per barrel, while WTI fell 5.16% or $1.61 to $29.59 per barrel, as oversupply and lacklustre demand permutations, along with the possibility of Iranian sanctions being lifted sent short-sellers into overdrive mode right from early placings during Asian trading hours.

Yann Quelenn, market strategist at Swissquote, said, “Oil faces significant challenges in 2016 despite its already low pricing. Meanwhile, the lifting of US sanctions will keep the spread between Brent and WTI tight.

“Steady supply glut, on-going concerns over the economic outlook of China, disagreement among OPEC members and even El-Nino driven warmer winter weather will ensure that prices remain low.”

Elsewhere, base metals also took a hammering with most futures contracts in negative territory on the London Metal Exchange. The three-month delivery contracts of copper (down 0.9%), primary aluminium (down 1.1%), lead (down 1.2%), nickel (down 1.2%), tin (down 0.9%) and zinc (down 1.6%) were trading lower just ahead of the LME close.

Liz Grant, senior account executive at Sucden Financial, said, “LME price activity saw all the gains from Thursday given back with copper making a fresh low at $4,318. General easing in nearby rates was a feature with lending of January/February noted. Trading was thin and choppy especially in copper and 3m outright turnover remained low across all the contracts.”

However, precious metals rose with the COMEX gold futures contract posting a rise of 1.51% or $16.20 to $1,089.80 an ounce, while spot gold was 1.40% or $15.07 higher in Dubai at $1,093.45 an ounce.

Away from gold, COMEX silver rose 1.51% or 21 cents to $13.96 an ounce, however spot platinum fell 0.39% or $3.25 to $832.50 an ounce.

Finally, agricultural commodity futures were largely on mixed turf in early trading stateside. CBOT corn (up 1.05%), wheat (up 0.8%) and ICE cocoa (up 1.75%) rose, while CME live cattle (down 2.30%) and ICE cotton (down 0.39%) contracts were in negative territory.