Crude oil prices pushed higher on Tuesday after the Organization of the Petroleum Exporting Countries said Monday that there is “clear evidence”
Crude Oil Prices Rise as OPEC Says Market Coming into Balance – Crude oil prices pushed higher on Tuesday after the Organization of the Petroleum Exporting Countries said Monday that there is “clear evidence” the market is rebalancing after years of oversupply. Prices remained supported after OPEC Secretary-General Mohammed Barkindo said in a speech Monday that there are clear signs that the oil market is coming into balance and that the group remains committed to its goal of reducing global stockpiles. OPEC has spearheaded an effort to reduce output in order to end years of overproduction that led to a massive global supply glut. The remarks helped oil prices to stabilize on Monday after they fell more than 2% on Friday amid concerns that Hurricane Nate would curb demand from refiners. Oil traders were looking ahead to monthly reports from OPEC and the International Energy Agency on Wednesday and Thursday respectively to assess global oil supply and demand levels. Weekly reports on U.S. stockpiles of crude and refined products, also due out on Wednesday and Thursday will be scrutinized for signs of the impact of recent storm activity on supply and demand. The reports come out one day later than usual due to the U.S. Columbus Day holiday on Monday. The market was also waiting on President Donald Trump’s decision on Thursday on whether or not to certify Iran’s compliance with the international nuclear deal. The Persian nation is an OPEC member and key Middle Eastern oil producer.
Gold Prices Rise on Softer Dollar, Geopolitical Worries – Gold prices rose on Tuesday boosted by the softer dollar and safe haven buying as geopolitical tensions kept investors on edge.Gold priced bounced back Monday from one-month lows as renewed concerns over tensions with North Korea and an escalating diplomatic crisis between the U.S. and Turkey underpinned safe haven demand for the precious metal. Many investors favor gold during times of uncertainty or upheaval.A weaker dollar makes gold futures, which are denominated in the U.S. currency, cheaper for foreign buyers. The slight drop in the dollar came as investors were continuing to digest Friday’s U.S. jobs report for September which supported expectations for a December rate hike by the Federal Reserve. Interest rate futures are currently pricing in around a 90% chance of a December rate hike according to Investing.com’s Fed Rate Monitor Tool. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
Rising Production, Flat Demand Weighing on Prices- U.S. natural gas futures remain under pressure early Tuesday after prices fell to their lowest level since April 2016 on Monday. Traders are blaming forecasts for mild weather combined with a steady rise in production on the weakness. Looking at November as the front-month futures contract, the market is trading at its lowest level since August 9. The December futures contract is trading at a multi-month low. With the U.S. split diagonally by cool and mild temperatures to the West and warm high pressure to the East, national demand is expected to be low over the near-term. According to natgasweather.com, “Overall, it’s (the weather pattern) a somewhat bearish set up as we wait on colder weather systems to finally arrive over the Great Lakes and Northeast, which still won’t be for a little while longer.”
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