Brent rebounds as Russia-Ukraina tensions spike
International benchmark Brent crude rose in American trade on Monday and held its ground above three-week lows scaled earlier in the European session, amid mounting tensions between Russia and Ukraine.
It overshadowed concerns about weakening demand in China and expectations of a supply surplus in 2025.
Prices
Brent rose 1.1% today to $71.75 a barrel, with a session-low at $70.74.
Brent closed down 1.95% on Friday, the first loss in three days on concerns about Chinese demand.
Oil prices lost 4.5% on average last week, the second weekly loss in three on grim outlook for global demand growth.
Ukraine-Russia Tensions
Russia launched its heaviest airstrikes on Ukraine in more than three months, causing severe damage to the country’s energy network.
Additionally, the US Biden administration allowed Ukraine to use American made weapons to hit deeper into Russia according to media sources.
The Kremlin warned that such a decision would directly implicate the US into the conflict, and accused the Biden administration of escalation.
According to five sources in the Russian oil industry, at least 3 refineries were forced to stop processing and reduce operations due to heavy losses from export limitations and higher crude prices and borrowing costs.
Chinese Demand
Recent Chinese data showed refinery output fell by 4.6% in October compared to last week, while factory output slowed down last month.
Grim Outlook
According to the International Energy Agency’s monthly report, global crude supplies are expected to surpass a million bpd next year, led by US growth.
OPEC reduced its outlook for global demand growth last week for this year and the next, due to weakness in China and India.
Bitcoin moves higher towards record highs
Bitcoin rose on Monday and resumed the gains, approaching record highs once more and holding its ground above $90,000.
The markets still expect the Federal Reserve to cut interest rates in December, while waiting for more clues to ascertain the odds.
The Price
Bitcoin rose 2.65% at Bitstamp today to $92,234, with a session-low at $89,652.
On Sunday, bitcoin lost 0.8%, the second loss in a row on profit-taking away from record highs at $93,483.
Bitcoin spiked 11.75% last week, marking the third weekly profit in a row on Trump trade momentum, and after a major purchase by MicroStrategy.
Crypto Market Value
The market value of cryptocurrencies rose by over $75 billion to a total of $3.205 trillion as both bitcoin and ethereum rallied.
The market value hit a record high last week at $3.235 trillion.
US Rates
According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in December stood at 68%, with a 32% chance of no changes.
Nearly 7 Federal Reserve officials are scheduled to speak this week on US inflation, growth, and the future of interest rates.
Any cuts in US interest rates usually boost investment and demand on high-risk assets, including cryptocurrencies.
US dollar backs off one-year high on profit-taking
The US dollar fell in European trade on Monday against a basket of major rivals, extending the losses for the second day and moving away from a year high on active profit-taking, while US 10-year treasury yields stall.
The markets still expect the Federal Reserve to cut interest rates in December, while waiting for more clues to ascertain the odds.
The Index
The dollar index fell 0.2% today to 106.50, with a session-high at 106.78.
On Friday, the index lost 0.2%, marking the first loss in six days and moving away from a year high at 107.06.
The dollar index rose 1.65% last week, the second weekly profit in a row, and the largest since September on Trump trade momentum.
US Yields
US 10-year treasury yields fell 0.3% on Monday away from six-month highs at 4.505%, pressuring the greenback.
The Federal Reserve is now more likely to cut interest rates for the third time this year in December, in turn pressuring the greenback.
US Rates
According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in December stood at 68%, with a 32% chance of no changes.
Nearly 7 Federal Reserve officials are scheduled to speak this week on US inflation, growth, and the future of interest rates.
Strong opening for the week: Gold rallies 1.5% as dollar stalls
Gold prices rose 1.5% in European trade on Monday, about to mark the first profit in seven days and moving away from two-month lows on short-covering.
The gains are boosted by the dollar's weakness against major rivals, as markets still expect the Federal Reserve to cut interest rates in December.
Prices
Gold prices rose 1.5% to $2597 an ounce, with a session-low at $2563.
On Friday, gold prices lost 0.1%, the sixth loss in a row, approaching two-month lows at $2536.
The precious metal slumped 4.55% last week, the third weekly loss in a row, and the heftiest since June 2021 as the dollar and US treasury yields spiked.
US Dollar
The dollar index fell 0.2% on Monday away from one-year highs at 107.06 against a basket of major rivals.
A weaker dollar makes greenback-denominated gold futures cheaper to holders of other currencies.
The dollar is also sustaining losses as the momentum of Donald Trump’s election victory wanes in wait for actual implementation of his ambitious economic plans.
US Rates
According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in December stood at 68%, with a 32% chance of no changes.
Nearly 7 Federal Reserve officials are scheduled to speak this week on US inflation, growth, and the future of interest rates.
SPDR
Gold holdings at the SPDR Gold Trust rose 2.56 tons, the first increase since October 30.
Thus total holdings have now reached 869.93 tons, moving away from recent September 11 lows.