Oil Prices Edge Down on Easing Geopolitical Risks, Weak China Demand

FILE PHOTO: Storage tanks are seen at Marathon Petroleum's Los Angeles Refinery, which processes domestic & imported crude oil in Carson, California, US, March 11, 2022. Picture taken with a drone. REUTERS/Bing Guan/File Photo
FILE PHOTO: Storage tanks are seen at Marathon Petroleum's Los Angeles Refinery, which processes domestic & imported crude oil in Carson, California, US, March 11, 2022. Picture taken with a drone. REUTERS/Bing Guan/File Photo
TT
20

Oil Prices Edge Down on Easing Geopolitical Risks, Weak China Demand

FILE PHOTO: Storage tanks are seen at Marathon Petroleum's Los Angeles Refinery, which processes domestic & imported crude oil in Carson, California, US, March 11, 2022. Picture taken with a drone. REUTERS/Bing Guan/File Photo
FILE PHOTO: Storage tanks are seen at Marathon Petroleum's Los Angeles Refinery, which processes domestic & imported crude oil in Carson, California, US, March 11, 2022. Picture taken with a drone. REUTERS/Bing Guan/File Photo

Oil prices edged lower on Tuesday as Israel accepted a proposal to tackle disagreements blocking a ceasefire deal in Gaza, helping ease concerns over supply disruptions in the Middle East.
Brent crude was down 67 cents, or 0.86%, at $76.99 a barrel, as of 0600 GMT. Front month US West Texas Intermediate crude futures, which expire on Tuesday, were at $73.75 a barrel, easing 62 cents, or 0.8%. The more actively traded second month contract was last down 63 cents or 0.86% at $73.03 a barrel.
Brent had fallen about 2.5% on Monday, while WTI eased 3%.
"Prices seem to find some headwinds from geopolitical developments in the Middle East and China's demand outlook," said Yeap Jun Rong, market strategist at IG, referring to weak Chinese economic data, which cast doubts on the country's oil demand prospects.
"A ceasefire deal in Gaza now seems more likely than not, which saw market participants pricing out the risks of geopolitical tensions on oil supplies disruption."
US Secretary of State Antony Blinken said on Monday that Israeli Prime Minister Benjamin Netanyahu had accepted a "bridging proposal" presented by Washington to tackle disagreements blocking a ceasefire deal in Gaza, and urged Hamas to do the same.
Also easing supply concerns, production at Libya's Sharara oilfield has risen to about 85,000 barrels per day in a move aimed at supplying the Zawia oil refinery, two engineers working at the field told Reuters on Monday.
Libya's National Oil Corporation (NOC) had declared force majeure on oil exports from the field on Aug. 7 after a blockade by protesters hit production at the 300,000-bpd field.
In the United States, crude stockpiles were expected to have fallen by 2.9 million barrels last week, a preliminary Reuters poll showed on Monday.
On the demand side, worries about China's economic problems pressured oil prices. After a dismal second quarter, the world's second-largest economy lost momentum further in July as new home prices fell at the fastest pace in nine years, industrial output slowed, export and investment growth dipped and unemployment rose.
"Demand concerns centered around China continue to linger. Recent data releases reinforce the view of weaker Chinese oil demand," ING analysts said in a note to clients.
"Trade and industrial output numbers last week suggested that apparent oil demand continued to trend lower in July. These worries mean that speculators continue to be hesitant about jumping into the market."
Investors also awaited indication of the US Federal Reserve's plans for the next interest rate decision.
The Fed will cut interest rates by 25 basis points at each of the remaining three meetings of 2024, according to a slim majority of economists polled by Reuters who said a recession is unlikely.
Rate cuts reduce borrowing costs and could boost oil demand in the world's top oil-consuming country.



Gold Rises as Fears Mount over Trump's Reciprocal Tariff Plans

FILE PHOTO: Gold bars are displayed at a gold jewelery shop in the northern Indian city of Chandigarh May 8, 2012. REUTERS/Ajay Verma (INDIA - Tags: BUSINESS COMMODITIES)/File Photo
FILE PHOTO: Gold bars are displayed at a gold jewelery shop in the northern Indian city of Chandigarh May 8, 2012. REUTERS/Ajay Verma (INDIA - Tags: BUSINESS COMMODITIES)/File Photo
TT
20

Gold Rises as Fears Mount over Trump's Reciprocal Tariff Plans

FILE PHOTO: Gold bars are displayed at a gold jewelery shop in the northern Indian city of Chandigarh May 8, 2012. REUTERS/Ajay Verma (INDIA - Tags: BUSINESS COMMODITIES)/File Photo
FILE PHOTO: Gold bars are displayed at a gold jewelery shop in the northern Indian city of Chandigarh May 8, 2012. REUTERS/Ajay Verma (INDIA - Tags: BUSINESS COMMODITIES)/File Photo

Gold prices rose on Thursday as US auto tariffs ratcheted up global trade tensions ahead of an April 2 deadline for reciprocal tariffs from the world's largest economy.

Spot gold was up 0.3% at $3,028.65 an ounce, as of 0650 GMT. US gold futures gained 0.5% to $3,036.10.

US President Donald Trump on Wednesday unveiled a 25% tariff on imported cars and light trucks starting next week, widening the global trade war.

Investors feared that Trump's reciprocal tariffs, expected to take effect on April 2, might fuel inflation, slow economic growth and heighten trade tensions.

Concerns over Trump's tariff policies catapulted gold to a record high of $3,057.21 on March 20.

Aakash Doshi, global head of gold at SPDR ETF Strategy, expects gold will breach $3,100 in the second quarter and "the market could potentially push another 8%-10% higher by end-2025 if the current macro and physical market tailwinds sustain for the yellow metal."

Goldman Sachs on Wednesday raised its end-2025 gold price forecast to $3,300 per ounce from $3,100, citing stronger-than-expected ETF inflows and sustained central bank demand.

Investors await the US personal consumption expenditures data, due on Friday, which could shed more light on the US interest rate path.

"The March high near $3,057 is immediate resistance for gold prices. The $3,100 figure follows next," said Ilya Spivak, head of global macro at Tastylive.

Last week, the US central bank held benchmark interest rate steady, but indicated it could cut rates later this year. Non-yielding bullion tends to thrive in a low interest-rate environment.

Minneapolis Federal Reserve Bank President Neel Kashkari said that while the US central bank has made a lot of progress bringing inflation down, "we have more work to do" to get inflation to the Fed's 2% target.

Spot silver rose 0.1% to $33.73 an ounce, platinum fell 0.4% to $970.34 and palladium lost 0.5% to $963.03.