Commodities: Oil, metal futures in recovery mode

Oil benchmarks were on a positive footing on Monday, while selected metal futures traded higher as Chinese copper miners announced production cuts over the weekend.

At 1700 GMT, the Brent front-month futures contract was up 0.96% or 43 cents to $45.29 per barrel. Meanwhile, WTI was 1.53% or 64 cents higher at $41.99 per barrel, as both benchmarks registered gains with traders placing speculative bets on the off-chance that the conclusion of the OPEC Ministers’ Summit in Vienna, Austria on 4 December might see a quota cut.

Despite hedging for the element of surprise, much of the market still expects the oil producers’ cartel to maintain its current official production level at 30m barrels per day (bpd), which it is already capping at 31.88m bpd. Furthermore, oversupply concerns have not materially altered with incremental barrels expected from Iran and Iraq, while Russia, another major producer, does not appear to relenting on the production front either.

Jasper Lawler, analyst at CMC Markets, said, “The cartel is most likely going to hold firm on the policy of maintaining production levels to starve out higher cost producers especially US shale. If OPEC signals output will remain the same and global growth is forecasted to slow, it’s hard to see much upside for oil.”

Meanwhile, selected metal futures registered gains in late afternoon trading in Europe. At 1635 GMT, three-month delivery contracts of lead (up 1.4%), nickel (up 1.1%) and zinc (up 0.3%) saw decent upticks on the London Metal Exchange. However, primary aluminium (down 0.7%) and tin (down 0.8%) traded lower.

The copper contract, still at historic lows, registered a 0.3% uptick to $4,592.00 per metric tonne as Chinese copper producers agreed over the weekend to cut refined production by 200,000 metric tonnes in 2016. Additionally, in Zambia, Konkola Mines announced “mothballing” of its Nchanga mine.

Liz Grant, senior account executive at Sucden Financial, said, “LME session initially saw softer prices and business was largely routine in low/moderate turnover. Copper traded either side of $4,600 and aluminium held recent support at $1,450 level. Zinc and lead both traded narrowly with no fresh features and nickel, like aluminium, held the lows of Friday.”

Precious metals also saw modest upticks with COMEX gold futures up 0.63% or $6.70 to $1,062.90 an ounce, while spot gold was 0.63% or $6.71 higher at $1,064.17 an ounce. COMEX silver was up 0.23% or three cents to $14.08 an ounce, but spot platinum was down 0.47% or $3.95 to $831.80 an ounce.

Finally, agricultural commodity futures were largely in negative territory in early trading stateside. CBOT wheat (down 0.10%), ICE cocoa (down 0.75%), and CME live cattle (down 0.34%) futures were trading lower. However, CBOT corn (up 1.57%) and ICE cocoa (up 0.97%) were trading higher.