Evening Track : US sanctions on Russian oil keep crude oil prices elevated by Kotak Securities Ltd
Comex Gold futures stabilized today, trading above $2,680 per ounce, following a significant decline in the previous session. This comes as expectations for fewer US interest rate cuts this year were tempered by safe-haven demand driven by the upcoming return of the former President. Recent strong US jobs data has reinforced the view that the Federal Reserve will likely maintain its current interest rate stance for an extended period. Despite a stronger dollar and rising bond yields, gold has found support as investors seek refuge amidst the uncertainty surrounding the new administration. The incoming President's economic team is currently considering a gradual monthly increase in tariffs, according to informed sources
WTI crude oil futures traded steadily near $78.5 per barrel on Tuesday following a three-day rally. Prices had reached a five-month high in the previous session due to tightened US sanctions on Russia's energy sector, targeting key exporters, insurers, and numerous tankers. This, coupled with calls for stricter curbs from 10 European nations, has raised concerns about global supply disruptions. Early signs of disruption are evident, with India barring sanctioned vessels from discharging and China seeking alternative sources like the UAE and Oman. However, the impact of tighter supply might be partially offset by weaker demand from China. Data revealed a decline in China's crude oil imports in 2024 for the first time in two decades, excluding the pandemic period
LME Copper prices rallied to over $9,140 per ton, reaching two-month highs, driven by encouraging Chinese trade data despite a strengthening dollar. December trade data saw a significant 18% surge in China's unwrought copper and copper products imports, the highest in 13 months, indicating increased demand from smelters and potentially signaling a rise in future manufacturing activity. The potential impact of the incoming Trump administration's trade policies on copper prices remains a key factor. Reports suggest a gradual implementation of tariffs, aimed at boosting negotiating leverage and mitigating inflationary pressures. Goldman Sachs predicts that China will employ a range of stimulus measures to counter the effects of potential US tariffs and a persistent housing downturn. However, the firm anticipates a slight slowdown in Chinese economic growth to 4.5% in 2025 from an estimated 5% in 2024.
European natural gas futures trading in a narrow range to trade near €48.30 a megawatt-hour on Tuesday, following a significant 7% surge in the previous session. Traders are currently balancing a milder-than-expected weather forecast, which could reduce heating demand, against concerns over depleting European gas inventories and ongoing global supply tightness. While a recent weather outlook suggests above-normal temperatures towards the end of January and into early February, the market remains under pressure due to faster-than-usual inventory drawdowns this winter. This volatility was further exacerbated by a series of bullish events, including heightened US sanctions against Russia and a recent gas outage in Azerbaijan.
Today, investors will focus on US PPI data along with speeches from Fed officials that will offer further market cues.
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