Commodity wrap: oil plunges below $60 on peace deal hopes; bullion, base metals fall post US jobs data

Oil prices plunged with Brent falling below $60 per barrel on Tuesday for the first time in seven months. 

Prices were under pressure as hopes of a peace deal between Russia and Ukraine dented sentiments. 

Meanwhile, gold prices were steady after spending most of the day in the red, following the release of the US jobs data.

Base metal prices were lower as investors adopted a cautious stance with the release of the US data that is being closely examined for indications regarding the future direction of interest rates.

Oil slips to multi-months low

Oil prices continued their descent, reaching levels not seen since 2021 in case of the West Texas Intermediate crude. 

This decline is attributed to investor concerns that a potential ceasefire in Ukraine could ease restrictions on Russian crude, further contributing to an already oversupplied market. 

Following Monday's close at a four-year low, West Texas Intermediate (WTI) traded below $57 a barrel, while Brent crude fell below $60. 

The possibility of a resolution was highlighted by President Donald Trump, who stated that a deal to end Russia's conflict in Ukraine is closer than ever, following discussions with Ukraine's Volodymyr Zelensky and European leaders.

“The daily MACD has turned down sharply, indicating increased downside momentum, while still being far from oversold,” said David Morrison, senior market analyst at Trade Nation. 

If this proves to be weak and half-hearted, then it would suggest that prices could fall further, according to Morrison. 

At the time of writing, the WTI crude price was at $55.68 per barrel, down 1.8%, while Brent was down 1.7% at $59.56 a barrel. 

Gold and silver ease

Investors adopted a cautious stance, leading to a dip in gold prices on Tuesday. 

US nonfarm payrolls increased slightly more than expected in November, according to data released by the Bureau of Labor Statistics after delays caused by the government shutdown.

Payrolls rose by 64,000 during the month, exceeding the Dow Jones estimate of 45,000. The unemployment rate climbed to 4.6%, higher than forecast.

Alongside the November figures, the BLS published an abbreviated October report showing a decline of 105,000 jobs.

Separately, economists surveyed by Reuters had expected payrolls to grow by 50,000 in November following an anticipated contraction in October, and had projected the unemployment rate at 4.4%.

Later this week, investors will closely examine the November Consumer Price Index and Personal Consumption Expenditures Index for additional indicators regarding next year's monetary policy.

Non-yielding bullion typically thrives in lower-rate environments.

At the time of writing, the COMEX gold contract was at $4,334.10 per ounce, down 0.1%, while silver was $63.170 per ounce, down 0.7%. 

Trade Nation’s Morrison said:

Base metals fall

Most base metals were trading slightly lower on Tuesday, with the exception of aluminium, which was marginally higher. 

Despite this potential tailwind, stocks and other risk assets were weakening after the release of US economic data on Tuesday.

Meanwhile, the Canadian government's approval of Anglo American Plc's acquisition of Teck Resources Ltd. has paved the way for a $50 billion metals powerhouse. 

This new entity will primarily focus on copper mining operations in Chile and Peru. 

Meanwhile, Anglo's copper division has also become a target for competitors, as evidenced by the London-based company twice rejecting takeover bids from BHP Group, the world's largest miner.

Anglo Teck has announced a C$10 billion minimum investment over 15 years in the country. 

This plan includes extending the operational life of the Highland Valley copper mine, increasing the processing capacity at the Trail refining complex, and accelerating the development of two new copper projects.

At the time of writing, the three-month copper contract on the London Metal Exchange was at $11,639.15 per ton, down 0.3%, while the aluminium contract was up 0.3% $2,881.75 per ton.