Commodities: Crude enjoys moderate rally but still faces downside glut risk

Crude-oil futures made moderate gains but still face downside risk as it struggles to bust through firm resistance.

At about 15:28 BST, Nymex-priced West Texas Intermediate crude was up 0.38% to $47.25 a barrel, with Intercontinental Exchange-traded Brent up 0.3% to $49.83 a barrel.

FXTM research analyst Lukman Otunuga said crude had struggled amid reports Opec's output in June climbed to its highest levels so far in 2017.

This was as Nigeria and Libya pumped more oil, being exempted from the cartel's recently extended production cubes.

"It's quite remarkable how the seemingly harmless supply cut exemptions for Libya and Nigeria are threatening to sabotage the efforts made by the rest of the group to rebalance the saturated markets," opined Otunuga.

He and others noted that rising oil output in the US was a further piece of the equation that continued to compound the oversupply concerns.

"Although WTI crude has staged an impressive rebound from the $42 level, sellers may be enticed to exploit the technical bounce to install renewed rounds of selling, with $45 acting as a level of interest," said Otunuga.

"From a technical standpoint, the $47-48 region should act as a check point for bears to jump back in," he added.

Meanwhile, on Comex, gold rose 0.33% to $1223.20 an ounce. Silver fell 0.23% to $16.06 an ounce. Copper shed 0.41% to 268.2 cents a pound.

"Gold bulls found support in the form of geopolitical risk during Tuesday’s trading session as the metal rebounded from $1220," continued Otunuga.

He noted that although the current market anxiety and flight to safety had the ability to support gold, the sharp $23 depreciation observed on Monday would be difficult for bulls to claw back.

"Short-term bears remain in control with Gold at risk of depreciating further if the Greenback continues to stabilize.

"From a technical standpoint, the yellow metal has turned bearish on the daily charts. Weakness below $1220 may open a path towards $1214."

On London Metals Exchange, three-month industrial metals were mostly higher. Zinc rose 1.7%, tin added 0.88% and aluminum gained 0.42%. Copper eased 0.15%.