Unfortunately for its shareholders, the BHP Billiton Limited (ASX: BHP) share price has been amongst the worst performers on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) this morning.
In early trade the mining giant's shares are down 3% to $22.29.
Why has BHP fallen lower?
Today's decline is likely to relate to continued weakness in both oil prices and iron ore prices.
According to Bloomberg, West Texas Intermediate crude oil fell 2.2% to US$43.23 a barrel overnight.
This is the lowest level that WTI crude oil has traded at since the middle of September. Brent crude oil also fell to a seven-month low.
Prices fell after it emerged that OPEC's oil output rose in May due to rising production in Nigeria, Libya and Iraq. This comes at a time when the oil cartel is intent on slashing production in order to raise prices.
Elsewhere, after a run of gains, the iron ore price looks set to come under pressure today.
According to Metal Bulletin, Chinese iron ore futures fell sharply overnight due to bearish sentiment intensifying.
One investment bank that is especially bearish on iron ore is Citi. A recent research note out of it reveals that it expects the iron ore price to slump into the low US$40s a tonne over the next six to eight months as the global supply glut increases.
Unsurprisingly the Fortescue Metals Group Limited (ASX: FMG) share price has also fallen around 3% lower today.
Is BHP a bargain buy?
Whilst BHP certainly looks to be good value following recent declines, I am concerned that its shares could yet be dragged even lower if oil and iron ore continues to slump.
At this point in time I feel both commodities are more likely to fall lower than go higher.
So for this reason I would suggest investors hold off an investment in BHP and wait for oil and iron ore to find a bottom.
