Commodities
Gold prices hold steady amid Federal Reserve’s interest rate warning and global economic concerns
© Reuters.
Gold prices remained mostly steady on Monday, despite the potential for a further drop due to warnings from the Federal Reserve about prolonged higher interest rates. The strength of the dollar and yield pressures have also contributed to the situation. Over recent weeks, gold has shown minimal fluctuation in its trading range.
The Federal Reserve recently signaled that interest rates could rise again this year and may decrease less than previously anticipated in 2023, possibly remaining above 5%. This has caused investors to favor the dollar as a safe haven, as global economic conditions appear to be worsening.
Inflation is resurging in major economies due to rising oil prices, which could potentially hamper growth this year. Amid these circumstances and growing concerns about a possible U.S. government shutdown, gold has found some support.
Meanwhile, on Monday, industrial metals saw little movement due to escalating worries about additional economic challenges in China. The London Metal Exchange (LME) and nickel finished last week on a lower note. These concerns were amplified after China Evergrande (HK:) Group, a struggling property developer, announced it could not issue new debt due to an ongoing government investigation into one of its units.
China’s property sector is facing a cash crunch that has persisted for three years and has received limited fiscal support from Beijing. This week, attention will be focused on Chinese purchasing managers’ index data, scheduled for release on Friday, for further insights into business activity.
Oil prices rose on Monday as investors shifted their attention back to tighter supply outlooks. This shift occurred after Moscow implemented a temporary ban on fuel exports while remaining wary of potential further rate hikes that could dampen demand.
contracts ended their three-week winning streak and fell last week following the Federal Reserve’s hawkish stance which unsettled global financial sectors and raised concerns about oil demand. Prices had surged over 10% in the preceding four weeks due to predictions of a significant crude supply deficit in the fourth quarter, following Saudi Arabia and Russia’s decision to extend additional supply cuts until the end of the year.
Last week, Moscow temporarily banned gasoline and diesel exports to most countries in an effort to stabilize its domestic market. More updates on stock market trends and other business, political, tech, sports, and auto news are expected to follow.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
Commodities
Oil set for weekly loss on surplus fears despite OPEC+ cut extensions
By Enes Tunagur
(Reuters) -Oil prices fell on Friday as analysts continued to forecast a supply surplus in 2025 despite the OPEC+ decision to postpone planned supply increases and extend deep output cuts to the end of 2026.
futures were down 66 cents, or 0.9%, to $71.43 per barrel at 1128 GMT. U.S. West Texas Intermediate crude futures were down 65 cents, or 1%, to $67.65 per barrel.
For the week, Brent was on track to fall 2%, while WTI was on course for a 0.5% drop.
The Organization of the Petroleum Exporting Countries and its allies on Thursday pushed back the start of oil output rises by three months until April and extended the full unwinding of cuts by a year until the end of 2026.
The group, known as OPEC+ and responsible for about half of the world’s oil output, was planning to start unwinding cuts from October 2024, but a slowdown in global demand – especially in China – and rising output elsewhere have forced it to postpone the plan several times.
“The outcome of the latest meeting of OPEC+ members surprised us positively … The extension of the production cuts shows the group remains united and is still targeting to keep the oil market in balance,” UBS analyst Giovanni Staunovo said.
Pressuring prices on Friday, analysts reiterated expectations of a supply surplus next year, although some of them now view a smaller surplus than before.
Bank of America forecasts increasing oil surpluses to drive Brent to average $65 a barrel in 2025, while expecting oil demand growth to rebound to 1 million barrels per day (bpd) next year, the bank said in a note on Friday.
HSBC, meanwhile, now expects a smaller oil market surplus of 0.2 million bpd, from 0.5 million bpd previously, it said in a note.
Brent has largely stayed in a tight range of $70-75 per barrel in the past month, as investors weighed weak demand signals in China and heightened geopolitical risk in the Middle East.
“The general narrative is that the market is stuck in its rather narrow range. While immediate developments might push it out of this range on the upside briefly, the medium-term view remains rather pessimistic,” PVM analyst Tamas Varga said.
Commodities
Oil pares some gains after source says OPEC+ to delay output hike
By Paul Carsten
LONDON (Reuters) -Oil prices pared some gains on Thursday after a source told Reuters OPEC+ has agreed to delay a planned oil output hike until April 2025.
was up 24 cents, or 0.3%, to $72.55 a barrel at 1237 GMT. It had been at $72.84 before Reuters reported the delay.
U.S. West Texas Intermediate (WTI) rose 25 cents, 0.4%, and was trading at $68.79 a barrel.
The planned delay comes as OPEC+, made up the Organization of the Petroleum Exporting Countries plus allies including Russia, tries to support prices as it wrestles with weak demand, notably from China, and rising supply outside the producer group.
“It will not make next year’s oil balance tight and supply surplus is still anticipated,” said Tamas Varga of oil broker PVM. “This view was mirrored in the gut price reaction.”
There remains the question of how long the delays could last, with this only the latest in a series. OPEC+ was originally due to begin raising output in October as part of a plan to gradually unwind the group’s most recent layer of output curbs of 2.2 million barrels per day.
“They reiterate that these barrels will indeed come back,” said Bjarne Schieldrop, chief commodities analyst at SEB. “It’s a limited time frame. This means there is no upside to the oil price in the next couple of years.”
Elsewhere, a larger-than-expected draw in stockpiles last week also provided some support to prices.
In the Middle East, Israel said on Tuesday it would return to war with Hezbollah if their truce collapses and its attacks would go deeper into Lebanon and target the state itself.
Meanwhile, Donald Trump’s Middle East envoy has travelled to Qatar and Israel to kick-start the U.S. President-elect’s diplomatic push to help reach a Gaza ceasefire and hostage release deal before he takes office on Jan. 20, a source briefed on the talks told Reuters.
Commodities
OPEC+ likely to extend oil output cuts to support market- report
On Thursday, OPEC+ is expected to postpone its planned increase in oil production, which was initially scheduled to commence in January, Reuters reported.
The decision to maintain current output levels aims to provide additional support for the oil market. The group, responsible for about half of the world’s oil supply, had intended to start easing output restrictions through 2025 but is now reconsidering in light of a global demand slowdown and increased production from non-member countries.
The consortium’s plan to unwind output cuts has faced challenges due to these market conditions, which have also exerted downward pressure on oil prices.
Accordingly, an extension of the current output cuts for an additional three months is the most probable outcome of the online meeting. However, there are indications that an even longer extension could be under consideration.
The deliberations within OPEC+ reflect the group’s ongoing efforts to balance oil supply with fluctuating global demand. The decision to delay the increase in output is seen as a measure to stabilize the market, which has been affected by various economic factors.
Market participants are closely monitoring the developments from OPEC+’s meeting, as the group’s decisions have significant implications for global oil supply and pricing. The final outcome of the meeting, including the length of the extension, will be determined by the consensus of the member countries.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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