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Oil prices edge lower ahead of US inflation data; OPEC maintains forecasts

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on – Oil prices edged slightly lower Tuesday, handing back some of the previous session’s gains in cautious trade ahead of key U.S. inflation data, while OPEC+ kept its demand and supply forecasts unchanged. 

AT 08:05 ET (12:05 GMT), fell 0.3% to $83.11 a barrel, while fell 0.4% to $78.84 a barrel.

Both contracts rose more than 1% each on Monday. 

Trading ranges have been limited Tuesday due to caution ahead of key U.S. inflation data, which is likely to factor into the outlook for interest rates in the U.S. , the world’s largest consumer of energy 

China outlines fiscal stimulus plans 

There had been a positive tone on Monday after China’s finance ministry said that it plans to start raising 1 trillion yuan ($138 billion) through a long-awaited bond issuance this week.

The issuance is aimed chiefly to stimulate key aspects of China’s sluggish economy, and will entail the issuance of special government bonds with tenors of 20 to 50 years. 

Chinese ministers said the bonds will be used to shore up sluggish economic growth, and will be deployed towards key sectors including infrastructure. 

While the issuance was largely telegraphed by Chinese authorities, its confirmation still factored into some optimism over improving economic conditions in the world’s biggest oil importer. 

The bond issuance came after mixed inflation readings over the weekend raised some concerns over a sustained economic recovery in China. While consumer inflation rose, producer inflation shrank for a 19th consecutive month. 

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Canadian wildfires could cause potential supply disruptions 

Additionally, major wildfires spread across Western Canada, presenting the potential for disruptions in Canadian oil and gas supplies, especially as they neared a key oil hub. 

Residents of Fort McMurray, Alberta, were put on alert as the province saw two “extreme” wildfires. The city is the closest settlement to Canada’s biggest oil-sands operations, and had in 2016 suffered severe damage from wildfires. 

Still, rain in the region helped decrease the immediate threat from the fires, although residents were still kept on alert. 

Any worsening in the wildfires present the prospect of supply disruptions in Canada’s massive oil and gas industry, which is a key part of North American crude markets. 

Canada’s worst-ever wildfire season, seen in 2023, knocked out as much as 300,000 barrels of production a day. In 2016, damage to Fort McMurray had put about 1 million barrels per day out of commission.

Uncertainty over OPEC meeting  

What the group of top producers, known as OPEC+, decides to do with supply at its next meeting at the beginning of June is also causing uncertainty within the crude markets.

Iraq’s oil minister, Hayyan Abdul Ghani, is reported to have said over the weekend that his country would honour voluntary output cuts made by OPEC+, which includes the Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers, at its upcoming meeting on June 1.

That reversed course from his Saturday comments that Iraq had made enough voluntary reductions and would not agree to any new output cuts.

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“The lack of price direction more recently is no surprise given the uncertainty over what OPEC+ members may do with their additional voluntary supply cuts,” analysts at ING said, in a note.

OPEC, earlier Tuesday, maintained its global oil supply and demand forecasts unchanged for 2024 and 2025 in its , leaving the call on OPEC+ crude at 43.2 million barrels a day this year, rising to 44 million barrels per day in 2025.

(Ambar Warrick contributed to this article.)


Gold and silver to continue to appreciate – Julius Baer

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on – With another day of gains in and futures, the Swiss group Julius Baer has decided to change its outlook on commodities to constructive. The group now believes that both metals have the potential for further increases, as stated in a note sent to clients and the market on Friday morning.

The group mentioned that, in addition to U.S. monetary policy, the gold market is still dominated by Asia. “We have to recognize that the region’s willingness to pay for gold as a hedge against economic and geopolitical risks appears even greater than we expected,” said Carsten Menke, head of next-generation research at Julius Baer.

Weaker-than-expected U.S. economic data have revived hopes for interest rate cuts by the Federal Reserve (Fed, the U.S. central bank), boosting gold and silver prices. This could “be the missing incentive for safe-haven seekers in the Western world to return to the markets,” he added.

Central Bank Purchases in Focus

Central banks have been buying gold more for geopolitical reasons than economic ones, according to Julius Baer. In China, for example, there is a desire to reduce dependence on the U.S. dollar – important for avoiding potential sanctions.

The People’s Bank of China is believed to be responsible for at least 30% to 50% of all central bank purchases over the past two years. Although it shows signs of being price-sensitive, “its willingness to pay has increased as gold prices rise,” notes Julius Baer. It is expected that other monetary authorities will follow the same steps, moving away from the U.S. dollar.

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Goldman Sachs discusses what’s next for natural gas prices

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Over the past three weeks, US prices have surged 30% to above $2.50 per million British thermal units (mm/BTU), fueled by production declines and increased feedgas demand for liquified natural gas (LNG) exports.

Moreover, recent producer cuts, maintenance events, and Freeport LNG’s normalization of gas demand post-outage have contributed to this rise. Cheniere’s announcement of no heavy maintenance for its liquefaction trains this year also supports higher prices.

In a Thursday note, Goldman Sachs strategists said the return of gas prices above $2/mmBtu aligns with their expectations, as production curtailments “would ultimately lead to lower storage congestion risks for this summer.”

“That said, we see only limited further upside from current levels, with stronger gas prices risking a return of congestion concerns,” they added.

Goldman notes that prices above $2/mmBtu reduce gas competitiveness compared to coal, with a $0.50/mmBtu increase potentially cutting gas demand by 1 billion cubic feet per day (Bcf/d), especially in shoulder months.

Moreover, higher prices may prompt the restart of previously shut-in wells. EQT (ST:), the largest producer in the Appalachia region, indicated it would resume production if prices sustainably exceed $1.50/mmBtu. And while Appalachia prices haven’t risen as much as NYMEX, the local hub has averaged $1.44/mmBtu month-to-date, up 10¢ from last month, strategists highlighted.

Elsewhere, European gas prices have also risen this summer, though less sharply than in the US.

Title Transfer Facility (TTF) prices increased 18% over the past three months to around 30 euros per megawatt-hour (MWh), holding steady in May.

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However, unlike the US market, this rally lacks fundamental support, with Northwest (NW) European gas storage at record-high levels, Goldman strategists pointed out.

“To be sure, NW European LNG imports have remained weak relative to last year – and are likely to get weaker in the coming weeks owing to a seasonal decline in global LNG production, exacerbated by outages at Australia’s Gorgon export project,” they said.

“Going forward, we expect healthy non-European demand for LNG to continue to incentivize a decline in European LNG imports vs last year,” they continued.

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Gold prices trim some weekly gains on tempered rate cut hopes

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on– Gold prices fell slightly on Friday, trimming some of their gains for the week as comments from a slew of Federal Reserve officials offered a more sobering outlook on interest rate cuts. 

The yellow metal had risen to nearly $2,400 an ounce this week in the immediate aftermath of some soft U.S. economic readings. But it pulled back from these levels on Thursday and Friday.

steadied at $2,377.40 an ounce, while expiring in June fell slightly to $2,381.10 an ounce by 00:19 ET (04:19 GMT). 

Gold retreats as Fed officials downplay rate cuts, but weekly gains due

The yellow metal fell on Thursday after a string of Fed officials cautioned against bets on immediate reductions in interest rates. 

Several members of the central bank’s rate setting committee said the central bank will need much more convincing that inflation was coming down beyond a marginally soft inflation reading for April. 

This saw traders begin pricing out some expectations for a rate cut in September. The and also rebounded from earlier losses this week. 

Still, some softer-than-expected readings put gold on course for a 0.7% weekly gain. 

The yellow metal was also in sight of a record high of above $2,430 an ounce, although it appeared unlikely the level would be met in the near-term. 

Other precious metals retreated on Friday, but were set for bumper weekly gains. fell 0.2% but were trading up 6.2% for the week, while fell 0.4% but were up 4.5% this week. 

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Copper mixed amid middling China cues

Among industrial metals, one-month copper futures tumbled from two-year highs tracking middling economic data. But three-month copper futures pushed higher and were set for a stellar week as markets bet on tighter supplies and an eventual demand recovery in the coming months. 

on the London Metal Exchange rose 0.6% to $10,445.0 a ton, while rose 0.3% to $4.8935 a pound. 

Data from China on Friday painted a mixed picture of the economy. While grew more than expected, growth slowed and shrank at an accelerated pace. Growth in Chinese also slowed.

The readings presented a muddled outlook for the world’s biggest copper importer, as it rolled out more stimulus measures to shore up growth.

Three-month copper futures gained on the prospect of a demand recovery, and were up nearly 4% this week. They were also at two-year highs. 

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