Oil futures took a hammering on Monday (31 October) as traders continue to lose faith in Opec's ability to lower production following reports of splits within the cartel's ranks.

At 5:13pm BST, the WTI front month futures contract was down 3.29% or $1.60 to $47.10 per barrel, while Brent was 3.12% or $1.55 lower at $48.16 per barrel, with bearish sentiment firmly entrenched following Iraq's request for an exemption from Opec's proposed headline production cut from 34.6m barrels per day (bpd) to a 32.5m to 33.0m bpd range.

Both benchmarks spiked to a 15-month high on 19 October, but have been in general retreat since, as market commentators continue to cast doubt on cooperation between Opec and Russia. Both met in February and April, but failed to reach a conclusive agreement.

With Libya, Nigeria and Iran, unlikely to partake in any output cut, things were not looking good for Opec, according to Mike Wittner, head of oil market research at Societe Generale. "These things always go right down to the wire. There is a lot at stake here. If they don't reach an agreement oil will fall like a rock and be testing $40 in no time."

Analysts at Vienna-based JBC Energy said crude benchmarks were settling below $50 after discussions between Opec and non-Opec discussions appear gridlocked. "Expectations cannot be sustained without tangible Opec action, by which we mean a cut of at least 1m bpd. Moreover, the impact of current high prices on US shale has not been fully factored in yet, while it appears as if further production has been forward hedged indicating supply gains even in the event of renewed price pressure."

Meanwhile, bets placed by hedge funds and other money managers suggest short positions in the WTI front month contract, ie calls that the oil price is going to fall, rose 0.4% to 56,563 futures and options, according to data published by the US Commodities Futures Trading Commission. Concurrently, long positions, ie bets to the upside, fell 6.6%, the highest decline since August.

Away from the oil market, precious metals continued to feel the effects of a stronger dollar, although silver futures stayed on positive turf.

At 5:52pm BST, the Comex gold futures contract for December delivery was down 0.19% or $2.40 at $1,274.40 an ounce, while spot platinum was 0.37% or $3.65 lower at $976.65 an ounce. Comex silver futures notched a marginal gain of 0.13% or ¢2 to $17.82 an ounce.

FXTM chief market strategist Hussein Sayed said that with the US presidential election nearly on the horizon, the Federal Reserve is expected to keep markets calm and stand pat on rates when it announces its monetary policy stance on Wednesday.

"The two-day meeting will most likely set the tone for December where markets are pricing more than 70% chance for a hike, likely impacting gold prices."