Commodity Capsule: Oil prices inch slightly higher on Tuesday after sliding last session, as markets weighed Middle East tensions against demand worries and rising OPEC supply.

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Crude oil benchmarks had fallen over 3 per cent and 4 per cent respectively on Monday on sharp price cuts by Saudi Arabia and a rise in OPEC output. However, concerns persist about the Gaza war.

The Israeli military has said its fight against Hamas will rage through 2024, worrying markets that the conflict could grow into a regional crisis that could disrupt Middle Eastern oil supplies.

US Secretary of State Antony Blinken arrived in Tel Aviv to brief Israeli officials on his two days of talks with Arab leaders on ending the war.

Capping price gains, however, was a rise in OPEC oil output in December amid increases in Angola, Iraq, and Nigeria.

Higher supply has prompted Saudi Arabia to cut February's official selling price of its flagship Arab Light crude to Asia to the lowest level in 27 months.

Gold prices edged higher on Tuesday, supported by a pullback in the dollar.

Global gold was hovering near $2,040 per ounce, after hitting a three-week low in the previous session.

New York Federal Reserve report on Monday said consumers expect lower inflation as well as weaker income and spending over the next several years.

Fed Governor Michelle Bowman retreated from her persistently hawkish view, saying she now sees U.S. monetary policy as "sufficiently restrictive" and signalled her willingness to support eventual interest-rate cuts as inflation eases.

Market participants are pricing in about a 62 per cent chance of a rate cut by the US central bank in March, down from the nearly 90 per cent probability seen before New Year.

HSBC GLOBAL RESEARCH RAISES GOLD 2024, 2025 FORECASTS TO $1,947/OZ (FROM $1,850/OZ) AND $1,835/OZ (FROM $1,725/OZ)

Sees a Wide Trading Range Of $1,825/oz-$2,200/oz For 2024

Iron ore futures largely rangebound with a weak bias on Tuesday, as steelmakers in China remained cautious on pre-holiday restocking amid lacklustre steel demand.

Dalian Iron ore contract in China slipped under 1,000 yuan/metric ton, following a drop of 1.1 per cent on Monday.

The continuous fall in demand for construction steel products showed limited interest in restocking steel products, which has hampered mills' enthusiasm for replenishing raw materials.

Some support is expected from a possible flurry of purchasing in the coming weeks to sustain production over the week-long Lunar New Year holiday break.

Copper prices rose on Tuesday, as the dollar weakened on bets of interest rate cuts by the U.S. Federal Reserve.

Three-month copper on the London Metal Exchange edged past $8,450/metric ton.

Dollar paused its rally, as traders reaffirmed their bets for a slew of Federal Reserve rate cuts this year on expectations that inflation in the U.S. is easing sufficiently.

Cash copper discount to benchmark 3-month contract on the London Metal Exchange hit $107/mt on Monday, the biggest discount since September 1992.

BMI maintains the 2024 average forecast at $8,800/tonne on supply constraints and a decline in US dollar strength as the Federal Reserve will possibly begin rate cuts later in the year.

Expect prices to reach $11,500/tonne in 2032 as the green transition accelerates, with supply growth outpacing demand.

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