Should you buy shares in BHP Billiton Limited today?

BHP Billiton Limited (ASX:BHP) is on the back foot following a poor session for commodities overnight.

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Shares of BHP Billiton Limited (ASX: BHP) have come under pressure today after two of the miner's key commodities suffered further setbacks overnight.

Brent crude oil fell 2.3% during the session to be fetching less than US$55 a barrel. The market is already oversupplied on the resource and there are now fears that Iran could soon release even more oil, exacerbating the issue even further. The resource racked up a 12% decline for the month, as highlighted by the Fairfax press, and could be set to fall further before prices begin to level out.

BHP's shares are also being impacted by the crashing iron ore price. Iron ore, which is BHP Billiton's most important commodity, fell US$1.34 to US$51.35 a tonne, according to the Metal Bulletin, which is its lowest price since at least 2004-2005 after having plummeted almost 30% since the beginning of the year.

Combined, these commodities generated more than half of BHP Billiton's revenues in 2014. Although the miner maintains low operating costs, the setbacks in the commodities' prices will still impact its margins and overall profitability, as well as its cash flows. Some analysts have even questioned its ability, as well as that of rival Rio Tinto Limited (ASX: RIO), to continue growing dividends which could result in a backlash from investors should it fail to do so.

While BHP Billiton might present as the safest miner on the ASX given its low costs and high levels of diversification, there's no reason to suggest its shares won't suffer in the medium term. As such, investors should continue to avoid the stock and indeed, the sector altogether.

Ryan Newman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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