Crude prices were on the backfoot on Tuesday, extending losses from the prior session as expectations of higher supply in the U.S. combined with uncertainty
Oil Prices Continue Lower Ahead of U.S. Supply Data, OPEC Meeting – Crude prices were on the backfoot on Tuesday, extending losses from the prior session as expectations of higher supply in the U.S. combined with uncertainty over a possible extension of output cuts by major crude producers dampened sentiment. Oil prices settled lower for the first time in four sessions Monday as doubts over an extension to a production-cut deal at the OPEC meeting later this week started to creep in. Oil ministers from the Organization of Petroleum Exporting Countries and other major producing countries will meet in Vienna on Thursday to decide whether to extend their current production agreement beyond a March 2018 deadline. Most market analysts expect the oil cartel to extend output cuts for a further nine months until the end of next year, but the terms were so far unclear, as Russia has sent mixed signals about whether it will back the move. The OPEC-led production cuts have been one of the key catalyst supporting the
recent rally in oil prices amid expectations that rebalancing in oil markets are well underway. However, fears that rising U.S. output would dampen OPEC’s efforts to rid the market of excess supplies are prevented prices from rising much further, according to market participants. Meanwhile, investors looked ahead to weekly data from the U.S. on stockpiles of crude and refined products to gauge the strength of demand in the world’s largest energy consumer.
Gold Pulls Back From 6-Week Highs Ahead of Powell Hearing – Gold prices drifted lower on Tuesday, pulling back from the prior session’s six-week high as investors awaited comments from the next head of the Federal Reserve for fresh clues on the likely trajectory of monetary policy. Jerome Powell, selected by President Donald Trump as the next Fed chair, appears before the Senate Banking Committee at 9:45AM ET (1445GMT) Tuesday for his confirmation hearing, which should provide some insight into how he plans to lead the Fed. Powell is widely expected to sound close to outgoing Fed Chair Janet Yellen on monetary policy, but perhaps looser when it comes to banking regulation. The U.S. central bank is scheduled to hold its final policy meeting of the year on Dec. 12-13, with interest rate futures pricing in a 100% chance of a rate hike at that meeting, according to Investing.com’s Fed Rate Monitor Tool. However, markets appeared doubtful over the central bank’s ability to raise rates as much as it would like next year due to concern over the sluggish inflation outlook. 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. Meanwhile, U.S. tax reform stayed on the agenda. President Donald Trump will meet with Senate Republicans on Tuesday to discuss their party’s efforts to pass tax reform legislation, with a vote on their bill coming as soon as Thursday. If the Senate bill is passed, joint legislation with the House, which passed its own version on Nov. 16, will have to be created.
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