Oil prices try to recover from six-month trough
Global oil prices rose on Thursday for the first time in six days away from six-month lows as the dollar slows down.
Concerns about US oversupply were assuaged, after a surprise drop in US crude stocks last week, while US crude production tapered off from recent record highs.
Prices were also boosted by remarks from member nations in the OPEC+ organization about deepening production cuts in the first quarter of next year to support prices.
Global Oil Prices
US crude rose 1.5% to $70.38 a barrel, while Brent added 1.6% to $75.43 a barrel.
US crude lost 3.9% on Wednesday, the fifth loss in a row, plumbing six-month lows at $69.13 a barrel, while Brent declined 3.7% to $74.14 a barrel, the lowest since June 29.
The recent wave of losses came amid concerns about softening demand in the US and China.
The Dollar
The dollar index fell over 0.4% on Thursday off three-week highs at 104.23 against a basket of major rivals.
Dollar was also hurt by a string of weak US labor data which pave the way for early interest rate cuts in 2024.
US Stocks
The Energy Information Administration reported a drawdown of 4.6 million barrels in the week ending December 1, beating estimates of a 1.3 million barrels drawdown.
Such a drawdown comes following a wave of buildups in the past six weeks, and it's a sign for rebounding demand in the US.
US Production
The EIA also reported a drop of 100 thousand bpd in US crude output last week, the first such decline since July to 13.1 million bpd.
OPEC+ Remarks
OPEC+ member Algeria said it's prepared to cut output further if needed after oil prices hit five-month lows.
Russia Vice Prime Minister said the organization is prepared to extend and deepen production cuts in the first quarter of 2024 to boost prices.
Dollar gives up three-week high ahead of unemployment claims data
Dollar declined in European trade on Thursday against a basket of major rivals away from three-week highs on track for the first loss in four days on active profit-taking.
Such losses come ahead of US unemployment claims data later today, which will provide clues on the health of the US labor sector.
The Index
The dollar index fell 0.4% to 103.78, with an intraday high at 104.20, after rising 0.2% on Wednesday, the third profit in a row, hitting a three-week high at 104.23 on speculation Bank of England and the ECB might cut interest rates faster than the Fed.
US Rates
The odds for a Fed interest rate hike at the December meeting stood at just 2%.
Odds for an interest rate cut at the Fed March 2024 meeting stood at 60%, while odds for such a cut at the May meeting stood at 85%.
Fresh Data
Now investors await important US labor data, including unemployment claims data for the week ending December 2, and the payrolls report tomorrow.
US unemployment claims are expected up to 221 thousand last week from 218 thousand in the previous reading.
Obviously, strong US labor data would assuage concerns about the economy and potentially delay interest rate cuts in 2024, in turn underpinning the greenback.
Gold keeps rising as dollar loses steam
Gold prices rose in European trade on Thursday for another session as the dollar slowed down against major rivals.
Markets expect the Federal Reserve to cut interest rates in March, while waiting for crucial US labor data this week including the payrolls report tomorrow.
Gold Prices Today
Gold prices rose 0.3% to $2,030 an ounce, with a session-low at $2,025, after rising 0.3% on Wednesday, the first profit in three days, approaching recent record highs at $2,146.
The Dollar
The dollar index fell 0.3% on Thursday away from a three-week trough at 104.23, on track for the first loss in four days on profit-taking against a basket of major rivals.
The index hit three-month lows recently following a spate of weak data and bearish remarks by Fed officials which paved the way for early interest rate cuts in 2024.
US Labor Sector
Recent data showed that momentum is receding in the US labor sector with job opportunities declining to 2-1/5 year low in October, while private sector employment disappointed as well.
US Rates
The odds for a Fed interest rate hike at the December meeting stood at just 2%.
Odds for an interest rate cut at the Fed March 2024 meeting stood at 60%, while odds for such a cut at the May meeting stood at 85%.
Fresh Data
Now investors await important US labor data, including unemployment claims data for the week ending December 2, and the payrolls report tomorrow.
The SPDR
Gold holdings at the SPDR Gold Trust remained flat at 880.83 tonnes yesterday.
Euro sharpens decline to three-week trough on European interest rate cut prospects
Euro fell in European trade on Thursday against a basket of major rivals, heading for the seventh loss in a row against the dollar and marking a three-week trough on prospects of early interest rates cuts by the ECB in 2024.
A string of cautious remarks by ECB officials came after euro zone inflation data showed prices hit 28-month lows.
EUR/USD
EUR/USD fell 0.1% to 1.0755, the lowest since November 14, with a session-high at 1.0772.
The pair lost 0.3% on Wednesday, the sixth loss in a row, the longest such streak of losses since September.
European Remarks
Banque de France's Governor François Villeroy de Galhau said that cutting European interest rates is likely in 2024 as the economy shrinks faster than expected.
European Central Bank member Isabel Schnabel said on Tuesday that more interest rate hikes in the euro zone "are unlikely", following the inflation data in November.
She said the data shows that inflation is losing steam but without the risk of long-term recession with it.
She believes that inflation is going in the right tract but there's need for progress in other major sectors.
The Timing of European Interest Rate Cut
The European Central Bank is expected to hold interest rates flat at the December meeting next week at 4.5%, already the highest in 22 years.
The probability of an ECB 0.25% interest rate cut at the March 2024 meeting stands at 85%.