Oil dips as OPEC+ hikes yet to translate into output increase
Oil (CL=F, BZ=F) prices dipped on Monday, heading lower as concerns around supply and the state of geopolitics continues to move markets.
By 9am in London, West Texas Intermediate had dipped to around $64.20, before bouncing back up to trade around 0.2% lower than the previous session. Brent crude (BZ=F) also dipped around 0.2% to trade near the $66.33 mark.
The end of last week saw a rally for the viscose commodity, as US non-farm payroll data came in hotter than expected.
Investors are, this week, eyeing OPEC+ output decisions as well as ongoing trade discussions between the US and China.
OPEC+ production hikes are yet to translate into actual output gains, analysts at Morgan Stanley said.
'Notwithstanding the around one million-barrel-a-day increase in production quotas between March and June, an actual increase in production is hard to detect,' analysts including Martijn Rats said in a June 9 note, according to a Bloomberg report. 'Notably, it does not appear that production in Saudi Arabia has ramped up significantly.'
US-China trade discussions will be on traders minds going into this week, with both economies having a large baring on oil consumption.
Sterling headed higher against the dollar, up around 0.3% to trade around $1.356 on Monday morning. Gains recoup losses at the end of last week, where the pound retreated from its highest point since 2022.
For the year-to-date the pound has rallied 8.1% against the world's reserve currency, as investor confidence in the US and its leadership has been shaken by wide-ranging tariff policy.
The dollar index (DX-Y.NYB) which tracks against a basket of currencies, was 0.3% lower. For the year-to-date that index is down 8.8% so far.
Delegations from the US and China are meeting in London today to discuss the future of the pair's so-far fractious trading relationship.
The delegation, including commerce secretary Howard Lutnick, is meeting Chinese representatives such as vice premier He Lifeng.
Chinese exports of rare earths, which are crucial for modern technology, as well as Beijing's access to US products, including computer chips, are on the laundry list of expected topics.
The pound also rallied 0.1% against the euro to 1.187.
Gold (GC=F) prices hovered on a flatline in Monday's trading session, following a dip at the end of last week. The heat has come out of gold's rally as the US irons out its trading relationships with key partners and volatility softens.
"It is a short-term gold tug-of-war," said Nadir Belbarka, analyst at XMarabia. "Firm economic news has moderated some of the need for a hawkish tone, but has not eliminated dovish desires. Lacking a top-line economic release today, gold's trend is more dictated on sentiment than on concrete facts."
Any escalation in hostility with trade discussions between the US and China could push the price up again, added Belbarka.
"Conversely, a strong Fed tone in forthcoming speeches would keep prices on a consolidating stance above levels of $3,300/oz, prior to mid-week CPI releases," he said.
Gold futures were trading around $3,344.30 per ounce by mid-morning. Spot gold's price was slightly higher, up 0.4% to trade around $3,320.
For the year-to-date, the yellow metal has gained 28.3%.
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