Commodities round-up: Oil slump enters third day after rising doubts over Opec proposals

Oil futures remained on negative turf for a third successive session on Wednesday (26 October), as traders continued to cast doubts over Opec's ability to enforce a production cut it proposed in September.

At 12:05pm BST, the West Texas Intermediate front month futures contract was down 1.38% or ¢69 to $49.27 per barrel, having slid below the $50 mark in Asian trading, while Brent was 1.30% or ¢66 lower at $50.13 per barrel, as rising US crude oil inventories weighed on market sentiment.

Overnight, the American Petroleum Institute (API) said oil supplies surged upwards by 4.8m barrels stateside for the week ended 21 October, nearly wiping out 5.2-million-barrel draw recorded the week before.

Meanwhile, market commentators continue to question Opec's ability to enforce its proposed production cut to a range of 32.5m to 33m bpd, first mooted on 28 September on the sidelines of the International Energy Forum in Algiers.

On Friday, Russia's Energy Minister Alexander Novak said the country's production could rise in 2017, but added that adjustments could be made contingent upon talks with Opec.

FXTM research analyst Lukman Otunuga said the oil market selloff was complimented with anxiety towards Russia not joining the Opec supply cut which raised questions over the success of the whole exercise.

"With Iraq requesting an exemption from the output curb after Iran, Nigeria and Libya, this just throws a spanner into the works, consequently pressuring oil even further. It is becoming quite clear that Opec members have exploited the market sensitivity to generate speculative boosts in prices and such may come at a painful cost if investors are left disappointed on 30 November.

"Sentiment remains bearish towards oil with this horrible combination of uncertainty and oversupply fears creating a firm foundation for sellers to drag oil prices lower in the short-term. From a technical standpoint, a breakdown below $49 could open a path lower towards $47.50."

Away from the oil market, the dollar's strength kept precious metal prices in check yet again. At 12:17pm BST, the Comex gold futures contract for December delivery was down 0.16% or $2.00 to $1,271.60 an ounce, well shy of $1,300-plus levels seen in September.

Elsewhere, in the precious metals market, the Comex silver contract for December delivery was 0.62% or ¢11 lower at $17.67 an ounce. Concurrently, spot platinum was 0.21% or $1.98 higher at $962.76 an ounce.