On Tuesday, oil prices had a slight technical bounce, with WTI last trading in the green by approximately 80 cents in the mid-$94.00s, but failing to hold above its 200-Day Moving Average of $95.00 per barrel. Prior to the publication of the official US government inventory statistics on Wednesday, oil markets are on alert for the release of weekly private US oil inventory figures at 2030GMT on Tuesday. As the economy shows indications of deceleration, the statistics will be studied for insight into the state of US demand.
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In addition to watching OPEC+ updates ahead of the group’s meeting later this week, oil dealers are also keeping an eye on OPEC+ developments. According to sources cited by the financial press, OPEC+ has reduced its anticipated oil surplus for this year by 200,000 barrels per day, to 800,000 barrels. Some OPEC+ members may push for another output increase in September if concerns about an oil market excess subside, despite reports from last week that the cartel is mulling either no output increase or a very modest one.
In recent weeks, oil prices have been under pressure due to mounting concerns about the future for demand as the global economy shows signs of weakening. Analysts believe that a sustained break below WTI’s 200DMA might unleash a cascade of selling pressure towards the $85 zone, the next critical point of support.
In addition, US natural gas prices maintained their recent decline from their late-July peaks. A few days ago, prices were as high as $9.50, but on Tuesday they were as low as $7.75, a decline of almost 6.5%.
Copper and Gold Prices Decline as the US Dollar Rises
On Tuesday, industrial metals, including copper, were pushed down by the strength of the US dollar amid a spike in tensions between the US and China following US House Speaker Nancy Pelosi’s visit to Taiwan and a steep jump in US bond yields. Copper prices fell down below $3.50 and were approaching their 21-Day Moving Average at about $3.40.
Monday’s global/Chinese manufacturing figures and Caterpillar’s disappointing results undoubtedly led to an increase in copper demand forecast fears. In the meanwhile, gold prices reversed sharply lower from an earlier resistance test in the upper $1,780s and were last seen in the middle of $1,760. The aforementioned strength in the U.S. dollar and U.S. rates led to gold traders cutting profits following the precious metal’s recent uptrend.