Commodities: Oil rises on output cut chatter, gold spike cools

Oil futures registered decent gains on Friday, while the previous session’s gold price spike cooled on profit taking as the weekend approached.

Conflicting reports suggested that Saudi Arabia might be willing to sign-up to a Venezuelan proposal that producer countries from the Organisation of the Petroleum Exporting Countries and those from outside ‘freeze’ their oil output at current levels if Iran also signed up to such an agreement.

At 1717 GMT, the Brent front-month oil futures contract was up 8.48% or $2.55 to $32.61 per barrel, while WTI rose 2.73% or $2.73 to $28.94 per barrel.

Jasper Lawler, analyst at CMC Markets, said, “Oil prices pulled away from multi-year lows on production cut talk from OPEC. An output cut would almost certainly be a game-changer for short term oil prices.

“But the reason it remains unlikely is that the resulting higher prices would encourage more shale oil production which could eventually add to the supply glut and bring prices back down.”

Meanwhile, the gold rally faltered as traders booked profits with the weekend in sight. The COMEX front-month gold futures contract was down 0.91% or $11.30 to $1,236.50 an ounce, while spot gold was down 0.81% or $10.04 to $1,236.66 an ounce.

COMEX silver fell 0.22% or three cents to $15.76 an ounce, while spot platinum fell 0.17% or $1.68 to $958.52 an ounce.

Selected base metal futures were in positive territory on the London Metal Exchange. At 1635 GMT, three-month futures contracts of copper (up 0.5%), primary aluminium (up 1.0%), nickel (up 1.5%) and lead (up 1.1%) headed higher. However, zinc (down 0.4%) and tin (down 0.6%) futures posted modest declines.

Liz Grant, senior account executive at Sucden Financial, said, "After recent market turmoil and volatility there was some semblance of calm in the markets on Friday as equities recovered from previous lows, the dollar gained ground and crude oil moved upwards.

“LME trading remained quiet and thin in the three-month contracts but hopefully normal business will be resumed with the return of Chinese traders and investors next week. Prices were mostly higher, as copper made steady progress up through $4,500 area.”

Finally, agricultural commodity futures remained on mixed turf. CBOT corn (up 0.07%), wheat (up 0.55%) and ICE cocoa (up 2.46%) futures headed higher. However, CME live cattle (down 0.19%) and ICE cotton (down 0.32%) traded lower in early calls stateside.