Oil prices were steady on Tuesday as investors assessed a smaller-than-expected production increase by the OPEC+ alliance scheduled for November, amid concerns about a potential global supply surplus.

Brent crude futures rose by 9 cents, or 0.14%, to $65.56 a barrel as of 11:54 GMT, while US West Texas Intermediate (WTI) futures added 8 cents, or 0.13%, to $61.77 a barrel.

Giovanni Staunovo, an analyst at UBS, said: “Oil prices remain resilient as the market watches whether the increase in floating oil inventories will translate into higher stockpiles in OECD countries, while preliminary data from India suggest continued strong oil demand in September.”

The contracts had ended the previous session more than 1% higher after the Organization of the Petroleum Exporting Countries (OPEC) and its allies — including Russia and several smaller producers, collectively known as OPEC+ — decided to raise total output by 137,000 barrels per day starting in November.

The decision ran counter to market expectations for a bolder increase, signaling that the group remains cautious amid projections of a potential oversupply in the fourth quarter of this year and into next year, according to analysts at ING Bank.

On the demand side, India’s fuel consumption rose 7% year-on-year in September, according to data from the Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum.

As for supply, J.P. Morgan reported that global oil inventories — including crude stored on tankers — rose every week during September, adding about 123 million barrels for the month.

In China, the government is accelerating the construction of oil storage sites as part of a campaign to strengthen its strategic reserves, according to official data, trade sources, and industry experts.

On the geopolitical front, tensions continue to lend support to oil prices, as the ongoing conflict between Russia and Ukraine keeps energy assets under pressure and heightens uncertainty over Russian crude supplies.

Industry sources said on Monday that Russia’s Kirishi refinery shut down its most productive distillation unit after a drone attack caused a fire on October 4, and recovery operations are expected to take about a month.

The US dollar rose against most major currencies during Tuesday’s trading as the government shutdown continued and concerns grew over its impact on the economy.

The most notable movement at the start of this week was the sharp decline in the Japanese yen, which fell by 1.6% against the dollar on Monday following Takaichi’s victory. Her unexpected win strengthened expectations for continued fiscal stimulus while reducing bets on an imminent interest rate hike by the Bank of Japan (BoJ). This uncertainty pushed both gold and bitcoin to record highs when priced in Japanese yen.

Although Takaichi’s post-victory statements about reconsidering the Bank of Japan agreement and “owning monetary policy” attracted attention, she has recently softened her tone opposing interest rate hikes, after having described them last year as a “stupid move.” This indicates that a full return to the peak of the Abenomics era is unlikely, especially since the Liberal Democratic Party (LDP) is currently governing as a minority government.

In contrast, reading the state of the US economy remains complicated due to the ongoing government shutdown, which has significantly reduced economic visibility. Still, this shutdown represents a tangible drag: S&P Global Ratings estimates it could subtract between 0.1 and 0.2 percentage points from GDP growth for every week it continues.

As for the limited data available — such as the JOLTS report and the September estimates from ADP and Revello Labs — they continue to indicate that the United States is experiencing a “no hiring, no firing” economy, characterized by extremely slow turnover and modest but positive job gains.

So, what can the Federal Reserve (Fed) do under these circumstances?

Despite the shutdown and the lack of new official data, the Fed is forced to draw signals from private-sector indicators and its broad communications network with businesses. So far, markets are pricing in another 25-basis-point interest rate cut by the end of the month.

Here lies a key paradox: how can the apparent weakness in the labor market — slow or stagnant job growth — coexist with solid economic growth projections such as the Atlanta Fed’s estimate of 3.9% GDP growth in the third quarter?

The answer likely lies in the sharp rise in labor productivity. GDP measures total economic output, and if companies produce more goods and services without hiring additional workers, output rises even if employment does not.

This trend is driven by strong capital expenditure (Capex) on technology, especially artificial intelligence (AI) and automation.

Companies are investing capital to improve the efficiency of their existing workforce, increasing productivity per working hour and raising GDP while the number of employees remains unchanged.

The result is a temporary but strong disconnect between rising profits and production on one hand and slow job creation on the other.

The “weakness” in the labor market is not only the result of weaker demand but also of reduced labor supply.

Structural factors — such as lower immigration rates and demographic trends like the retirement of baby boomers, as noted by the St. Louis Federal Reserve — have reduced the “equilibrium” employment growth rate needed to maintain stable unemployment.

This means limited job gains are not necessarily a sign of an impending recession, but rather of a structural scarcity in labor supply.

Moreover, short-term GDP figures can be affected by volatile factors such as sharp declines in imports, creating an impression of stronger growth that does not immediately reflect in job creation.

In the end, these interactions highlight an economy growing more efficiently, increasingly driven by capital-intensive technology, with limited labor-force expansion.

As for central banks, this week remains busy; the minutes of the Federal Open Market Committee (FOMC) meeting are expected on Wednesday, followed by a speech from Fed Chair Jerome Powell on Thursday.

Elsewhere, the Reserve Bank of New Zealand (RBNZ) will be in focus on Wednesday, with a widely expected 25-basis-point rate cut, while the Norges Bank will speak today and the Reserve Bank of Australia (RBA) on Friday.

Gold prices rose in the European market on Tuesday, extending gains for the third consecutive session and continuing to break record highs, after surpassing the $3,900 mark for the first time in history, moving toward the key psychological level of $4,000 per ounce.

The rally comes amid strong demand for the precious metal as a safe-haven asset, driven by political developments in Japan and France, the ongoing US government shutdown, and growing expectations of additional interest rate cuts by the Federal Reserve.

Price Overview

• Gold prices today: Gold rose 0.4% to a new all-time high of $3,977.52 per ounce, up from an opening price of $3,960.94, after hitting an intraday low of $3,941.04.

• On Monday, gold settled 1.9% higher, marking its second straight daily gain, after breaking above the $3,900 level for the first time in history on the back of strong safe-haven demand.

Strong Demand

Demand for gold surged this week, fueled by dramatic political events in Japan and France, as investors sought refuge in the metal amid rising uncertainty in major global economies.

A senior White House official stated that President Donald Trump’s administration will begin mass layoffs of federal employees if negotiations with congressional Democrats to end the partial government shutdown “yield no result.”

US Interest Rates

• Federal Reserve member Stephen Miran reiterated his call for an aggressive rate-cut path, citing the impact of the Trump administration’s economic policies.

• Kansas City Fed President Jeff Schmid said he is reluctant to lower rates further, emphasizing that the central bank should focus on the risk of persistently high inflation rather than perceived labor market weakness.

• Following weak US labor market data last week, the CME Group’s FedWatch tool showed that the probability of a 25-basis-point rate cut in October rose from 90% to 99%, while the odds of keeping rates unchanged fell from 10% to 1%.

• To reassess these expectations, investors are closely monitoring the resumption of US economic data releases and further remarks from Fed officials.

Gold Outlook

• Kelvin Wong, market analyst for Asia-Pacific at OANDA, said: “Rate-cut probabilities for October and December remain above 80%, which supports gold prices, alongside the ongoing government shutdown, as no resolution has been reached in Congress yet.”

• Goldman Sachs raised its December 2026 gold price forecast to $4,900 per ounce from $4,300 on Monday, citing strong inflows from Western exchange-traded funds (ETFs) and continued central bank buying.

SPDR Fund

Holdings in the SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — fell by 1.71 metric tons on Monday, marking the third consecutive daily decline, bringing total holdings down to 1,013.17 metric tons.

The euro fell in the European market on Tuesday against a basket of global currencies, extending its losses for the second consecutive session against the US dollar and nearing a two-week low recorded in the previous session, following stunning political developments in France, the eurozone’s second-largest economy.

French Prime Minister Sébastien Lecornu and his cabinet resigned on Monday, just hours after the announcement of his new government, marking the shortest-lived administration in modern French history and sparking fresh political uncertainty.

Price Overview

• Euro exchange rate today: The euro fell 0.25% against the dollar to $1.1677, down from the opening price of $1.1708, after recording a session high of $1.1715.

• On Monday, the euro closed 0.3% lower against the dollar, its third decline in four sessions, hitting a two-week low of $1.1652 amid the French political turmoil.

Resignation of Sébastien Lecornu

Sébastien Lecornu resigned as France’s prime minister in a surprise move that shocked the political landscape, stepping down only hours after unveiling his new cabinet, turning it into the shortest government in France’s modern history.

The withdrawal came despite efforts to form an executive team balancing economic reforms with social demands. However, Lecornu faced strong resistance from parliament and political groups opposed to policies tied to President Emmanuel Macron’s previous term.

Observers believe Lecornu may have failed to secure sufficient parliamentary support to pass his agenda, while pressure to form alliances with other factions and opposition to certain economic measures—such as deficit reduction or potential tax increases—contributed to his resignation.

Political Developments in France

Lecornu had been appointed earlier that same day in a last-ditch attempt to form a new government after weeks of complex negotiations following the early parliamentary elections in July 2025.

The elections produced a deeply divided parliament, with no party or coalition securing a majority, leading to political gridlock. Lecornu, a prominent political figure, was chosen to lead a consensus-driven government aimed at restoring stability and addressing France’s pressing economic and social challenges.

His resignation deals a heavy blow to President Emmanuel Macron, who already faces waning popularity and mounting political challenges. The current situation raises doubts about the French government’s ability to implement effective policies to address key issues such as rising energy costs, economic growth support, and maintaining competitiveness within the European market.

Bleak Outlook

The political upheaval is expected to delay negotiations on the European Union’s budget, where France plays a key role in shaping fiscal policy for the bloc.

The situation may also affect investor confidence in French bonds, as yields on French government debt have edged higher, signaling heightened perceived risk.

Analyst Commentary

• Sarah Ying, head of FX strategy at FICC, said: “The resignation of France’s new government is not an existential crisis, but it doesn’t look good domestically, particularly given the ongoing budget debates.”

• She added: “The greater risk would be a resignation from President Macron himself, though that currently seems like a low-probability scenario.”