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Oil prices rise as fears of oversupply ease after OPEC+ restricts production increase
Investors brushed aside fears of oversupply on Wednesday, after digesting a decision by OPEC+ earlier to limit production increases in the coming month. Brent crude futures were up 48 cents or 0.7% to $65.93 per barrel at 0400 GMT. U.S. West Texas Intermediate Crude climbed 51 cents or 0.8% to $62.24. The benchmarks settled broadly flat in the previous session as investors weighed signs of a supply glut against a smaller-than-expected increase to November output from the Organization of the Petroleum Exporting Countries and affiliates. The market is stuck in limbo. One side believes there will be a glut of supply, while the other believes that the ramp-up won't happen as quickly as expected," said Emril jamil, a senior researcher at LSEG Oil Research. Jamil said that traders have been betting on the price of crude oil to rise and are currently holding long positions or bets. This is due to continued efforts by Russia's government to reduce its crude exports. OPEC+ chose to increase production by 137,000 barrels a week, the lowest of the options discussed over the weekend. Investors are likely to discount production increases until the physical market softens via increasing inventories. This was the conclusion of ANZ analysts on Wednesday. The analysts at ANZ said that the price gains were capped by the easing of fears about Russian supply disruption. Crude oil shipments have been close to a 16 month high in the last four weeks. Investors will also be waiting for the Energy Information Administration to release U.S. inventories later on Wednesday. According to American Petroleum Institute sources, U.S. crude stockpiles rose by 2.78 millions barrels during the week ending October 3, according to figures released on Tuesday. The API data showed that gasoline and distillate stocks fell. The EIA reported on Tuesday that the U.S. is expected to surpass its previous expectations in terms of oil production this year. (Reporting and editing by Christopher Cushing, Christian Schmollinger, and Jeslyn Lerh)
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How investors buy gold, and what drives market?
Investors seeking to protect themselves from the increasing economic and geopolitical uncertainties, as well as expectations of future interest rate reductions by the U.S. Federal Reserve, drove gold prices above $4,000 per ounce on Wednesday. Bullion has increased 52% in value this year. This is due to a number of factors, including central bank purchases, monetary policy ease, and a weaker US dollar. Here are some ways you can invest in gold. SPOT MARKET Big banks are usually the gold buyers for large investors and large buyers. The spot market is determined by the real-time dynamics of supply and demand. London has the largest influence on the spot gold markets, thanks to the London Bullion Market Association. The association establishes standards for gold trading, provides a framework for over-the counter trades, and facilitates transactions between banks, dealers and institutions. China, India, Middle East, and the United States, are also major gold trading centers. Futures Market Futures exchanges are another way for investors to get exposed to gold. They allow them buy or sell commodities at a set price, on a specific date in the future. COMEX, part of the New York Mercantile Exchange (NYMEX), is the world's largest gold futures exchange in terms of volume of trading. Shanghai Futures Exchange (China's largest commodities exchange) also offers gold contracts. TOCOM (the Tokyo Commodity Exchange) is another major player on the Asian gold market. EXCHANGE TRADED PRODUCTS Exchange-traded product or exchange-traded fund issue securities backed with physical metal, allowing people to gain exposure without having to take delivery of the metal themselves. Exchange-traded fund demand has become the largest category for precious metal investment. According to World Gold Council data, the amount of money invested in gold-backed exchange-traded fund has reached $64 billion this year. September saw a record-breaking $17.3 billion. BARRES AND COINS Metals traders can sell bars and coins to retail consumers in shops or online. Both gold bars and coins can be used to invest in physical gold. DRIVERS: Investor Interest and Market Sentiment The price of bullion has been affected by the rising interest in investment funds over recent years. Sentiment fueled by news, global events, and market trends can drive speculative gold buying or selling. FOREIGN EXCHANGE RATE Gold is an excellent hedge against volatility in the currency markets. Gold has historically moved in the opposite direction of the U.S. Dollar, as a weaker dollar makes gold priced in dollars cheaper for holders other currencies. MONETARY POLICY & POLITICAL TENSIONS Precious metals are widely regarded as a safe haven in times of uncertainty. U.S. President Donald Trump’s trade tariffs, and his imposition on additional duties on Chinese products have sparked an international trade war. This has rattled currency markets and sparked fears of a rise in U.S. Inflation. Trade war escalates, with Trump increasing tariffs against Chinese imports up to 145%. China raised tariffs from 84% to 125% on U.S. products. Gold's direction is also affected by the policy decisions made by global central banks. Gold is less expensive to hold when interest rates are lower, since it does not pay interest. CENTRAL BANK GLOBAL GOLD RESERVES Gold is held by central banks as reserves. The demand for central bank gold has been high in recent years due to macroeconomic and political uncertainties. In its annual survey, conducted by the World Gold Council in June, it was revealed that more central banks intend to increase their gold reserves in the next year, despite the high price of the metal. The World Gold Council reported that global gold demand including over-the counter trading rose by 1% in 2024 to a new record high. Central banks also increased their buying in the last quarter. The People's Bank of China reported on Tuesday that China's gold reserves totaled 74.06 fine troy-ounces as of the end of September. This is up from 74.02 in the preceding month.
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IEA Cuts Renewables Growth Outlook to 2030
The International Energy Agency on Tuesday cut its global forecast for renewable power growth by 2030 by 248 gigawatts from last year's outlook, citing weaker prospects in the United States and China, even as solar power continues to drive record additions.Global renewable power capacity is now expected to rise by 4,600 GW by 2030 - down from the six-year forecast of 5,500 GW in 2024 - with solar accounting for about 80% of the increase, the data showed.The downward revision is mainly due to an early phase-out of U.S. federal tax incentives and other regulatory changes - lowering the IEA's U.S. growth expectations by almost 50% - while China's shift from fixed tariffs to competitive auctions is squeezing project economics.The downgrade is partly offset by stronger outlooks elsewhere. India is set to become the second-largest growth market after China and is on course to comfortably reach its 2030 target, supported by expanded auctions, faster permitting and a rooftop-solar surge.Europe's prospects have also improved on the back of ambitious policies, larger auction volumes and streamlined approvals, while many emerging economies across Asia, the Middle East and Africa are accelerating build-outs as costs fall and targets rise, the report said.Offshore wind remains a weak spot, with the agency's growth outlook about a quarter lower than last year due to policy resets, supply-chain bottlenecks and higher costs.Pumped‑storage hydropower is expected to grow 80% faster over the next five years than in the previous five as grid‑integration challenges mount and geothermal installations are on track to hit historic highs in the United States, Japan, Indonesia and other emerging markets."The growth in global renewable capacity in the coming years will be dominated by solar," IEA Executive Director Fatih Birol said, urging policymakers to tackle supply-chain security and grid constraints.The agency warned that solar and rare-earth supply chains remain highly concentrated in China, with key segments staying above 90% through 2030.(Reuters - Reporting by Forrest Crellin in Paris; Editing by Matthew Lewis)
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What drives the gold market and how investors buy it?
Investors seeking to protect themselves from the increasing economic and geopolitical uncertainties, as well as expectations of future interest rate reductions by the U.S. Federal Reserve, drove gold prices above $4,000 per ounce on Wednesday. Bullion has increased 52% in value this year. This is due to a number of factors, including central bank purchases, monetary policy ease, and a weaker US dollar. You can invest in gold using different methods: SPOT MARKET Big banks are usually the gold buyers for large investors and institutional buyers. The spot market is determined by the real-time dynamics of supply and demand. London has the largest influence on the spot gold markets, thanks to the London Bullion Market Association. The association establishes standards for gold trading, provides a framework for over-the counter trade, and facilitates transactions between banks, dealers and institutions. China, India, Middle East, and the United States, are also major gold trading centers. Futures Market Futures exchanges are another way for investors to get exposed to gold. They allow them buy or sell commodities at a set price, on a specific date in the future. COMEX, part of the New York Mercantile Exchange (NYMEX), is the world's largest gold futures exchange in terms of volume of trading. Shanghai Futures Exchange (China's largest commodities exchange) also offers gold contracts. TOCOM (the Tokyo Commodity Exchange) is another major player on the Asian gold market. EXCHANGE TRADED PRODUCTS Exchange-traded product or exchange-traded fund issue securities backed with physical metal, allowing people to gain exposure without having to take delivery of the metal themselves. Exchange-traded fund demand has become the largest category for precious metal investment. According to World Gold Council data, the amount of money invested in gold-backed exchange-traded fund has reached $64 billion this year. September saw a record-breaking $17.3 billion. BARRES AND COINS Metals traders can sell bars and coins to retail consumers in shops or online. Both gold bars and coins can be used to invest in physical gold. DRIVERS: Investor Interest and Market Sentiment The price of bullion has been affected by the rising interest in investment funds over recent years. Sentiment fueled by news, global events, and market trends can drive speculative gold buying or selling. FOREIGN RATES OF EXCHANGE Gold is an excellent hedge against volatility in the currency markets. Gold has historically moved in the opposite direction of the U.S. Dollar, as a weaker dollar makes gold priced in dollars cheaper for holders other currencies. MONETARY POLICY & POLITICAL TENSION Precious metals are widely regarded as a safe haven in times of uncertainty. U.S. President Donald Trump’s trade tariffs, and his imposition on additional duties on Chinese products have sparked an international trade war. This has rattled currency markets and sparked fears of an increase in U.S. Inflation. Trade war escalates, with Trump increasing tariffs against Chinese imports up to 145%. China raised tariffs from 84% to 125% on U.S. products. Gold's direction is also affected by the policy decisions made by global central banks. Gold is less expensive to hold when interest rates are lower, since it does not pay interest. CENTRAL BANK GLOBAL GOLD RESERVES Gold is held by central banks as reserves. The demand for central bank gold has been high in recent years due to macroeconomic and political uncertainties. In its annual survey, conducted by the World Gold Council in June, it was revealed that more central banks intend to increase their gold reserves in the next year despite the high price of the metal. The World Gold Council reported that global gold demand including over-the counter trading rose by 1% in 2024 to a new record high. Central banks also increased their buying in the last quarter. The People's Bank of China reported on Tuesday that China's gold reserves totaled 74.06 fine troy-ounces as of the end of September. This is up from 74.02 in the preceding month.
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Gold continues historic rally and soars above $4,000/oz.
Investors seeking to protect themselves from the increasing economic and geopolitical uncertainties, as well as expectations of future interest rate reductions by the U.S. Federal Reserve, drove gold prices above $4,000 per ounce on Wednesday. By 0213 GMT, spot gold had risen 0.5% to $4,002.53 an ounce. U.S. Gold Futures for December Delivery gained 0.5% at $4,025 an ounce. Gold is traditionally seen as an investment during periods of uncertainty. Gold spot is up 52 percent year-to date after rising 27 percent in 2024. The Fed is likely to continue lowering rates, so the market will be looking for the next round number of 5,000. There will be bumps along the way, such as a lasting ceasefire in the Middle East or Ukraine, but the fundamental drivers for the trade, massive debt and increasing reserves, diversification of reserve assets, and a lower dollar, are unlikely to alter in the medium-term. A cocktail of factors has driven the metal's rally, including expectations for interest rate reductions, political and economic uncertainties, central bank purchases, and inflows to gold exchange-traded fund. Tuesday marked the seventh day of the U.S. Government shutdown. The shutdown has delayed the release of important economic indicators. This forces investors to rely upon secondary, nongovernment data in order to determine the timing and magnitude of Fed rate reductions. Investors now expect a 25 basis-point reduction at the Fed's meeting in this month. An additional 25 bp is expected in December. The political turmoil in France, Japan and other countries has also increased demand for safe-haven gold. Analysts say that a "fear of losing out" also drives the rally. "What we are seeing is that investors continue to buy gold despite its high price, which is amplifying this move even further," said UBS Analyst Giovanni Staunovo. Silver spot rose by 0.5%, to $48.03. Platinum gained 2.2%, to $1653.21, and palladium increased 1.3%, to $1355.32. (Reporting and editing by Sriraj Kalluvila, Christian Schmollinger and Anmol Choubey in Bengaluru)
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Oil prices rise on fading fears of oversupply after OPEC+ restricts output
Early Wednesday, oil prices rose as the markets began to dismiss oversupply fears for now. This was after digesting a decision made by OPEC+ in November to limit production increases. Brent crude futures were up 40 cents or 0.6% to $65.85 per barrel at 0045 GMT. U.S. West Texas Intermediate Crude climbed 44 cents or 0.7% to $62.17. The benchmarks settled broadly flat in the previous session as investors weighed signs of a supply glut against a smaller-than-expected increase to November output from the Organization of the Petroleum Exporting Countries and affiliates. OPEC+ chose to increase production by 137,000 barrels a week, the lowest of the options discussed over the weekend. Investors are likely to discount production increases until the physical market softens via increasing inventories. This was the conclusion of ANZ analysts on Wednesday. Analysts said that the price gains were capped by the fact that the fear of Russian disruptions in supply has eased. Crude oil shipments have been close to 16-months highs over the last four weeks. Energy Information Administration will also be releasing U.S. Inventory trends later on Wednesday. U.S. crude stock levels rose by 2,78 million barrels during the week ending October 3, according to sources citing American Petroleum Institute data. The sources cited API data to say that gasoline and distillate stocks fell. The EIA reported on Tuesday that the U.S. production of oil is expected to be higher than originally anticipated this year. (Reporting and editing by Christopher Cushing; Jeslyn Lerh)
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Sources say that RPT-Traders are seeking yuan payments from Indian state buyers who purchase Russian oil.
Sources in the trade said that traders offering Russian oil are now asking Indian refiners to make payments in Chinese Yuan. They see recent signs of improved relations between New Delhi, China and Beijing as an opportunity to simplify transactions with Indian buyers. Indian Oil Corp, India's largest refiner and state-controlled company, paid in Chinese currency recently for two or three cargoes worth of Russian oil. Indian Oil has not responded to the request for comment immediately. Western sanctions against Russia following its invasion of Ukraine in 2022 have led to a greater use of alternative currencies such as the yuan or the dirham of the UAE for oil trades that were previously dominated by dollars. Indian state refiners paid for Russian oil using yuan in 2023. However, they stopped doing so due to the Indian government's displeasure during a time of increased tensions with Beijing. Private refiners, however, continued to use Chinese currency. One trader stated that traders who previously had to convert payments from dirhams and dollars to yuans - because only these can be directly converted into roubles to pay producers - now want to eliminate this costly step. Sources said traders also priced Russian oil in US dollars to ensure compliance with the European Union price cap, and sought payment equivalent to yuan. Due to sanctions, the West has stopped importing Russian oil. The sources stated that payments in yuan would increase the availability of Russian crude oil for Indian refiners as some traders refused to accept other currencies. After a break of over five years, India and China resumed direct flights. Last month, Indian Prime Minister Narendra Modi travelled to China for the first time since 2007. He was there to attend the Shanghai Cooperation Organisation's regional security bloc.
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US Sues Southern California Edison for Saddleridge Wildfire
The U.S. Government sued Southern California Edison for helping restore National Forest System land burned in the Saddleridge Wildfire near Los Angeles, in 2019. The lawsuit filed on Tuesday seeks damages to cover fire suppression and rehabilitation costs arising from Edison International's alleged negligence and trespassing by fire, as well as violations of California's public safety laws. Southern California Edison's spokesperson Gabriela Ornelas stated in a press release that the utility will review the complaint and respond via the legal process. The utility expressed its sympathy to the victims of fires. According to the Department of Justice, the Saddleridge Fire began at the base of an transmission tower near Sylmar in California during high winds after a powerline attached to another tower nearby fell on a steel arm, causing an electrical fault. According to a complaint filed at the Los Angeles federal courts, the fire on October 10, 2019, burned approximately 800 acres (324 ha) in the Angeles National Forest. It also damaged neighboring communities, and caused one death. Cal Fire reported that the Saddleridge Fire had burned 8,799 hectares (3,561 acres) in total. The government claimed that Southern California Edison was "aware of the potential dangers posed by high wind" and had failed to maintain its transmission lines, power lines, and other equipment. The government filed the lawsuit five weeks after it sued Southern California Edison for blaming their equipment for igniting the Eaton Fire and Fairview Fire of September 2022. The January wildfires, which included the Palisades Fire and Eaton Fire in Southern California, caused 31 deaths and damaged or destroyed more than 16,000 buildings. U.S. v. Southern California Edison Co et al. U.S. District Court Central District of California No. 25-09547. Reporting by Jonathan Stempel, New York; editing by Matthew Lewis
Gold cracks $4,000, stocks ease, yen wobbles due to political concerns
Investors were weighed down by the political fallout in France and Japan. Meanwhile, a prolonged U.S. shutdown pushed gold spot prices up to a record level of $4,000 an ounce.
The Japanese yen was hovering near its eight-month-low as investors awaited the fiscal policy direction of prime minister-in waiting Sanae Takaichi. Meanwhile, the euro was under stress after French Prime Minister Sebastien lecornu's resignation on Monday.
The dollar was a bit more optimistic. The dollar index (which measures the U.S. money against six other currencies) hit its highest level in August. However, sentiment was still gloomy as the shutdown entered its eighth day.
MSCI's broadest Asia-Pacific share index outside Japan, which measures the performance of all Asia-Pacific stocks, fell by 1% on Wednesday, slipping away from its 4-1/2-year high. China and South Korea were closed during the long holiday.
Nikkei 225 rose by 0.35% in Japan, but fell short of the record high reached the previous session.
After a surprising victory for fiscal dove Takaichi over the weekend, traders quickly cut their bets against another hike in the Japanese market this year.
Carol Kong, currency analyst at Commonwealth Bank of Australia said that Takaichi's win in the leadership race of the ruling Liberal Democratic Party has changed the risk balance to a rate hike later in 2026.
Kong said that option traders have become less bearish about the dollar/yen than they were in September 2022, but she still believes the dollar will continue to fall against the yen over the short term.
The yen fell to 152.33 dollars per yen, its lowest rate since mid-February. The yen has fallen over 3% in the past week and is on track to have its steepest weekly drop since last year. This raises concerns about possible intervention by Japanese authorities.
The euro dropped 0.26%, to $1.1628. It was at its lowest level for a month. Markets were bracing themselves for more political turmoil in France.
France's president Emmanuel Macron was under increasing pressure to resign, or to hold a snap parliamentary elections to end the political chaos which has seen five prime ministers resign in less than two year.
The New Zealand dollar fell nearly 1% following the central bank's 50 basis point cut to its benchmark rate and the fact that it left the door open for more easing. This suggests policymakers are worried about the fragile state of the economy.
All three U.S. indices finished in the negative after a New York Federal Reserve survey showed that consumer expectations were deteriorating and inflation projections were rising.
Investors have relied on independent secondary data and remarks by monetary policymakers to determine the likelihood that the Federal Reserve would implement its second rate reduction of the year during this month's meeting.
Traders have priced in 45 basis point of easing for this year. Gold prices have risen due to the prospect of rate cuts in the near future and demand for safe-haven assets. Gold prices rose to $4,000.96 an ounce on Tuesday, extending their gains for the past year above 50%.
Thierry Wizman is a global FX & Rates Strategist at Macquarie Group. He said that gold's rally was a collective "hedge" to the potential failure of the U.S. AI-driven tech bubble.
"A collapse in that optimistic 'vision,' could trigger an inflationary solution for the world's overhang of sovereign debt rather than a product-based solution." (Editing by Sam Holmes).
(source: Reuters)