Oil prices collapse, Brent slides below $70 for first time in 3 years
- OPEC reduces global oil demand growth forecasts
- Renewed concerns about global demand
Global oil prices lost 3% in American trade on Tuesday, resuming sharp losses after a short hiatus yesterday, with US crude hitting 16-month lows, while Brent traded below $70 for the first time in three years.
The decline came after OPEC reduced its forecasts for global demand growth for the second month, reigniting concerns.
Now traders await initial data later today on US crude stocks from the American Petroleum Institute, expected to show an inventory drawdown for the third straight week.
Prices
US crude fell 3% today to $66.66 a barrel, the lowest since May 2023, with a session-high at $69.05.
Brent tumbled 3.15% today to $69.70 a barrel, the lowest since December 2021.
On Monday, US crude eked out a 1% profit, while Brent added 0.6% amid attempts to recoup some lost ground.
OPEC Outlook
The OPEC organization reduced its forecasts for global demand growth for oil by 80 thousand bpd to about 2 million bpd in 2024.
OPEC expects total global demand growth to average 1.7 million bpd in 2025, down 40 thousand bpd from previous forecasts.
Global Performance
A series of weak industrial data in the US and China triggered concerns about a potential global recession, which would negatively impact fuel demand worldwide.
Chinese Demand
In a memo released late August, Goldman Sachs expected a sharp decline in Chinese oil demand as the economy shifts to natural gas and EV cars.
Dollar moves in a positive zone ahead of critical US inflation data
- US 10-year treasury yields rebound
- Odds of a 0.5% Fed rate cut recede
The US dollar rose in European trade on Tuesday against a basket of major rivals, moving in a positive zone for the third straight session as US 10-year treasury yields rebounded.
Bullish remarks from some Fed officials reduced the odds of a 0.5% Fed rate cut in September, with investors now waiting for important US inflation data on Wednesday to gather more clues.
The Index
The dollar index rose 0.1% today to 101.72, with a session-low at 101.54.
The index closed up 0.45% yesterday, the second profit in a row following bullish remarks by Fed officials.
US Yields
US 10-year treasury yields rose 0.6% on Tuesday away from 15-month lows at 3.650%, in turn hurting non-yielding assets.
US Interest Rates
According to the Fedwatch tool, the odds of a Fed 0.25% September rate cut stood at 71%, and the odds of a larger 0.5% rate cut this month stood at 29%.
Now investors await a batch of crucial US consumer and producer prices data on Wednesday to gather more clues on the likely path ahead for the Federal Reserve.
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Gold hovers around $2500 ahead of US inflation data
- Gold pressured by rebound in US treasury yields
- Markets await strong data on US rate cuts
Gold prices lost some ground in European trade on Tuesday, while still hovering near the psychological barrier of $2500, under pressure from the higher US 10-year treasury yields.
Trading remains limited as investors shun major positions ahead of important US inflation data.
Prices
Gold prices fell 0.25% today to $2500 an ounce, with a session-high at $2507.
On Monday, gold rose 0.4%, the third profit in four sessions as US yields slid back then.
US Yields
US 10-year treasury yields rose 0.6% on Tuesday away from 15-month lows at 3.650%, in turn hurting non-yielding assets.
US Interest Rates
According to the Fedwatch tool, the odds of a Fed 0.25% September rate cut stood at 71%, and the odds of a larger 0.5% rate cut this month stood at 29%.
Now investors await a batch of crucial US consumer and producer prices data on Wednesday to gather more clues on the likely path ahead for the Federal Reserve.
SPDR
Gold holdings at the SPDR Gold Trust remained unchanged yesterday at 862.74 tonnes, the highest since January 16.