Oil near 26-month high as Turkey threatens to choke Kurdish exports – Brent oil prices hovered near 26-month highs, supported by Turkey’s threat to cut crude exports from Iraq’s Kurdistan region as well as signs that market rebalancing is accelerating. Turkish President Tayyip Erdogan threatened on Monday to cut off the pipeline that carries 500,000-600,000 barrels of crude per day from northern Iraq to the Turkish port of Ceyhan, intensifying pressure on the Kurdish autonomous region over its independence referendum. The loss of this supply, combined with the 1.8 million bpd of supply cuts by the Organization of the Petroleum Exporting Countries and non-OPEC producers, has raised concerns of tighter supply. The Iraqi government said it will not hold talks with the Kurdistan Regional Government about the results of the referendum, which is expected to show a comfortable majority in favour of independence after the results are announced later this week. “Although there was plenty of price-bullish news making headlines yesterday, undoubtedly the biggest factor was the referendum in the Kurdistan region of Iraq,” analysts at Vienna-based JBC Energy said in a note. Top oil executives gathered at the S&P Global Platts APPEC conference in Singapore said strong oil demand this year was accelerating market rebalancing and helping inventory drawdowns. OPEC and non-OPEC producers meeting in Vienna last week said the market was well on its way towards rebalancing. However, other analysts were skeptical about further price gains due to higher oil output from the United States.
Gold Prices Steady Ahead of Yellen Speech – Gold prices steadied on Tuesday, catching their breath after rallying sharply in the prior session, as investors looked ahead to fresh comments from Federal Reserve Chair Janet Yellen for greater signs on the timing of the next rate hike. North Korea’s foreign minister said President Donald Trump had declared war on North Korea and that Pyongyang reserved the right to take countermeasures, including shooting down U.S. bombers even if they are not in its air space. Ri Yong Ho said a Twitter message by Trump on Saturday in which the president warned that the minister and North Korean leader Kim Jong Un “won’t be around much longer” if they acted on their threats amounted to a declaration of war. White House spokeswoman Sarah Saunders on Monday denied the United States had declared war and called the suggestion “absurd”. Meanwhile, the Fed is keeping itself in the market’s sights, with Chair Janet Yellen due to deliver a speech titled “Inflation, Uncertainty, and Monetary Policy” at the National Association for Business Economics’ Annual Meeting in Cleveland at 12:45PM ET (1645GMT) Tuesday. Interest rate futures are now pricing in about a 70% chance of a December Fed rate hike according to Investing.com’s Fed Rate Monitor Tool, up from under 40% just a few weeks ago.
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