Commodities
Oil prices ease, but China policy stance checks losses
By Paul Carsten
LONDON (Reuters) -Oil prices slipped on Tuesday as concerns eased about the fallout from the overthrow of Syria’s president, despite support from China’s plan to ramp up policy stimulus – a potential boost to demand from the world’s biggest crude buyer.
futures fell 39 cents, or 0.5%, to $71.75 per barrel at 1233 GMT. U.S. West Texas Intermediate was down 40 cents, 0.6%, at $67.97. Both benchmarks had risen more than 1% on Monday.
In Syria, rebels were working to form a government and restore order after the ouster of President Bashar al-Assad, with the country’s banks and oil sector set to resume work on Tuesday.
“The tensions in the Middle East seem contained, which led market participants to price for potentially low risks of a wider regional spillover leading to significant oil supply disruption,” said IG market strategist Yeap Jun Rong.
While Syria itself is not a major oil producer, it is strategically located and has had strong ties with Russia and Iran.
The power transfer, which followed 13 years of civil war and brought an end to over 50 years of brutal rule by the Assad family, raised concerns of regional instability.
Oil prices may get a boost if the Federal Reserve comes through with expected rate cuts of 25 basis points when it meets on Dec. 17-18. That could juice oil demand in the world’s biggest economy, though traders are waiting to see if this week’s inflation data derail the cut.
Oil’s losses were also offset by reports that China will adopt an “appropriately loose” monetary policy in 2025 as Beijing tries to spur economic growth. This would be the first easing of its stance in some 14 years, though details remain thin.
China crude imports also grew annually for the first time in seven months, jumping in November from a year earlier.
But that increase “was more a function of stockpiling than demand improvement,” said Tamas Varga of oil broker PVM.
“The economy will only be stimulated by improving consumer sentiment and spending, by a rise in domestic aggregate demand echoed in a healthy increase in consumer inflation.”
Investing.com — Copper prices are down more than 1% after the Federal Reserve hinted at fewer rate cuts for the upcoming year.
The shift to a more hawkish stance by the Fed has resulted in an increase in bond yields, a surge in the strength of the dollar to 25-month highs, and a spike in volatility. This shift has also led to a sharp decline in key commodity currencies.
Market participants have expressed concern that there isn’t much on the annual calendar to halt this downward trend. The three-month London Metal Exchange (LME) contract has registered a 1.5% decrease, trading at $8,912 a ton.
In addition to the Federal Reserve’s stance, looming U.S. tariffs on Chinese goods and uncertainties surrounding China’s domestic demand outlook continue to pressure the market.
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Investing.com– Gold prices rebounded from a one-month low on Thursday as the Federal Reserve lowered interest rates as expected, although the central bank’s hawkish stance on future rate cuts clouded the outlook for bullion.
Gold prices had dropped more than 2% overnight after the Fed’s policy meeting indicated fewer rate cuts in 2025, as sticky inflation remained a major concern.
jumped as much as 1.3% to $2,618.11, while expiring in February dropped 1.2% to $2,620.79 an ounce by 22:51 ET (03:51 GMT).
Spot gold rebounds, but outlook dim amid slower rate cuts
The Fed reduced by 25 basis points but signaled it will adopt a slower pace for future cuts.
Lower interest rates bode well for gold prices as the opportunity cost of holding gold decreases, making it more attractive compared to interest-bearing assets like bonds.
However, gold futures fell sharply as the rates are expected to remain higher for a longer period after Wednesday’s cut. Markets have ruled out chances of a cut in January and now expect just two more cuts in 2025, against their earlier expectations of four.
Fed Chair Jerome Powell said further reductions depend on progress in curbing persistent inflation, reflecting policymakers’ adjustments to potential economic shifts under the incoming Donald Trump administration.
The Federal Reserve’s hawkish stance was aimed at curbing inflation, but it also signals confidence in the resilience of the U.S. economy. This risk-on sentiment can reduce the demand for safe-haven assets, further dampening bullion’s prospects.
With fewer cuts expected in 2025, the is expected to strengthen further. The greenback surged to an over two-year high on Wednesday.
Additionally, the maintained its interest rates on Thursday, as policymakers remained cautious over Japan’s economic outlook and the path of inflation.
Among other precious metals, rose 0.7% to $928.90 an ounce, while slumped 2.7% to $29.922 an ounce.
Copper falls on as dollar hits 2-yr high
Among industrial metals, copper prices extended declines on Thursday after the Fed’s hawkish stance bolstered the dollar. The red metal took limited support from reports of more fiscal spending in top importer China over the coming year.
The rose 0.1% in Asian trade on Thursday and was at an over two-year high after the Fed meeting.
Benchmark on the London Metal Exchange fell 1.4% to $8,921.50 a ton, while one-month were largely unchanged at $4.089 a pound.
By Colleen Howe, Trixie Yap and Anna Hirtenstein
(Reuters) -Oil prices fell on Thursday after the U.S. Federal Reserve signalled it would slow the pace of interest rate cuts in 2025, which could hurt economic growth, reduce fuel demand and strengthen the dollar.
futures declined by 29 cents to $73.10 a barrel by 1249 GMT. U.S. West Texas Intermediate crude lost 16 cents to $70.42.
The declines gave back Wednesday’s gains on a drop in stocks and the Fed’s expected rate cut of 25 basis points.
Prices weakened after U.S. central bankers issued projections pointing to two quarter-point cuts in 2025 on concern over rising inflation. That was half a point less than they had flagged in September.
“The bottom line for oil is the longer the Fed stays on pause, the stronger the U.S. dollar. This tends to generate headwinds for commodities like oil,” said Harry Tchilinguirian at Onyx Capital Group.
A stronger dollar makes dollar-priced commodities more expensive while higher interest rates weigh on economic growth, potentially reducing demand for oil.
Chinese refining giant Sinopec (OTC:), meanwhile, expects China’s oil consumption to peak by 2027, it said on Thursday.
“The demand-supply balance going into 2025 continues to look unfavourable and predictions of more than 1.0 million bpd demand growth in 2025 look stretched in our opinion. Even if OPEC+ continues to withhold production, the market may still be in surplus,” said Suvro Sarkar, DBS Bank energy sector team leader.
Though demand in the first half of December rose year on year, volumes remained lower than expected by some analysts.
JP Morgan analysts said that global oil demand growth for December so far was 700,000 barrels per day (bpd) less than it had expected, adding that global demand this year has risen by 200,000 bpd less than it had forecast in November 2023.
Official data from the Energy Information Administration on Wednesday showed U.S. crude stocks fell by 934,000 barrels in the week to Dec. 13. Analysts polled by Reuters had expected a drawdown of 1.6 million barrels. [EIA/S]
While the decline was less than expected, the market found support from last week’s rise in U.S. crude exports by 1.8 million bpd to 4.89 million bpd.
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