Oil drops amid commodity selloff

Oil slid towards the $50-a-barrel handle on Tuesday (July 21st) as commodities came under broad selling pressure.

On the New York Mercantile Exchange, US crude for September delivery slid to $50.13, its lowest since April ahead of key data on stockpiles.

A report on US inventories is due from the American Petroleum Institute later, while Wednesday’s government report is expected to show a fall in inventories.

Oil’s decline comes amid a bearish week for commodities in general as gold has slumped to its lowest in five years.

Gold held around $1,100 an ounce on Tuesday after a sharp sell-off on Monday on growing expectations the US Federal Reserve is planning to hike rates this year.

Copper bounced off a two-week low, but remains not far off a six-year trough amid concerns about the state of China’s economy, the world’s largest consumer of the metal.

Pressuring commodities is a stronger dollar, which is close to a 12-year peak against a basket of currencies as investors bet on the Fed raising rates in September, a view backed up by recent comments from the bank’s chair, Janet Yellen.

EUR/USD was down at a three-month low at 1.0860, while GBP/USD was flat around 1.5550.

Decent corporate earnings figures from the US are also supporting equities despite the expectations for a rate hike this year. The Dow and S&P 500 are both near record highs as investors continue to plough into equities.

The DAX in Germany was trading at a two-month peak as markets shrugged off the baggage of Greece. London’s FTSE also returned to its highest in a month as the outlook for equities improved.

Automotive shares gave European markets a boost, while Royal Mail weighed on the FTSE as it reported flat revenues.

All eyes will be on Wall Street later as Apple, the world’s largest company by market capitalisation, releases its quarterly earnings.

However, Goldman Sachs advised investors to be cautious about US stocks with the Fed about to tighten, suggesting that European equities will outperform.