Commodity Wrap: Oil hits 6-month low, gold slips, copper surges amid economic uncertainty

Crude oil prices experienced a significant 3% overnight dip, plummeting to a six-month low.

The global markets are currently influenced by a complex interplay of geopolitical events, climate talks, and economic indicators. The ongoing US Federal Reserve meeting and upcoming reports from OPEC are particularly crucial factors that can impact the trajectories of oil, gold, and copper markets worldwide. Investors and analysts are navigating through a landscape marked by uncertainty, with the potential for significant shifts in the market dynamics in the coming days.

Crude oil prices saw a significant 3 percent overnight dip, plummeting to a six-month low. Concerns are mounting as doubts emerge about whether OPEC+ production cuts will be sufficient to counter the anticipated oversupply in the first quarter of 2024. The Energy Information Administration (EIA) has revised its 2024 Brent price forecast, slashing it by $10 to $83 per barrel. Additionally, the EIA predicts a rise in US oil output, projecting 12.93 million barrels per day (mbpd) for 2023 and 13.11 mbpd for 2024.

The reported attack on a Norwegian commercial tanker off the coast of Yemen by Houthi forces is a concerning development. Such incidents contribute to the complexity of the global oil market dynamics.

As negotiators at COP28 eagerly await a new draft deal aimed at phasing out fossil fuels, OPEC is set to release its monthly reports today. These reports will be closely watched for insights into the organization's strategy amid the evolving energy landscape.

Gold prices slipped ahead of the upcoming US Federal Reserve announcement. The rise in US inflation, surpassing expectations, has bolstered the belief that there won't be a rate cut in the first quarter of 2024. Analysts anticipate the Fed to maintain current rates in December, with an 80 percent probability of a cut in May 2024. Market participants are eyeing a price range of $1,950 to $2,050 in the near term. Heraeus Metals provides a 2024 outlook, placing gold between $1,880 and $2,250 per ounce.

Additionally, the European Central Bank (ECB) and the Bank of England (BoE) are scheduled to hold meetings on Thursday, injecting further uncertainty into the precious metal market.

Copper prices are on the ascent, attributed to a weaker US dollar, expectations of tight supply in 2024, and hopes for additional stimulus measures from China. This upward trend highlights the intricate dance between global economic factors influencing commodity markets.