Crude oil prices fell on Monday amid concerns that rising U.S. output could undermine efforts by OPEC to support the market by reducing excess supplies.
Crude Oil Prices Lower as Oversupply Concerns Weigh – Crude oil prices fell on Monday amid concerns that rising U.S. output could undermine efforts by OPEC to support the market by reducing excess supplies. Oil prices remained on the back foot after energy services firm Baker Hughes said Friday that the number of U.S. oil drilling rigs rose by two in the week to Dec.8, to 751, the highest level since September. It was the third consecutive weekly increase. A higher rig count points to an increase in U.S. oil production. An increase in U.S. output is threatening to derail efforts led by the Organization of the Petroleum Exporting Countries and a group of non-OPEC producers, including Russia, to rebalance the market by curbing output. OPEC and other oil producers started cutting output in January 2017 and currently plan to continue doing so throughout 2018. On Sunday, Kuwait’s oil minister Essam al-Marzouq said OPEC and its allies will consider before June whether to end supply cuts earlier.
Gold Prices Dip in Asia With Fed Language Seen Crucial For Direction – Gold prices dipped in Asia on Monday with the market prepared to listen closely to the Fed commentary this week after it reviews rates and in particular language on the impact of expected tax cuts. The Fed meets this week and is widely expected to hike interest rates by a quarter point. The European Central Bank, Bank of England and the Swiss National Bank are also due to hold monetary policy meetings, although no changes are expected. Last week, gold prices fell to a four-month low on Friday and posted the largest weekly fall since May after Friday’s stronger-than-expected U.S. jobs report underlined expectations for a rate hike by the Federal Reserve at its upcoming meeting. The U.S. economy added 228,000 jobs in November, the Labor Department reported, surpassing the 200,000 forecast by economists, while the unemployment rate held steady at 4.1% for a second consecutive month. The Fed is widely expected to raise interest rates at this week’s monetary policy meeting and is currently seen tightening two to three times next year, but concerns over tepid wage growth could alter the outlook for 2018. Expectations for higher interest rates are typically negative for gold as the precious metal struggles to compete with yield-bearing assets like Treasury’s when borrowing costs rise. A weaker dollar typically tends to support gold, which is denominated in the U.S. currency and becomes more affordable to foreign buyers when the dollar declines.
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