WTI (oil futures on NYMEX) extends its recovery from multi-month lows into a third day today and breaks through the 54 barrier to reach the highest level since November 23rd.
The renewed upside in the black gold can be mainly attributed to the latest OPEC headlines that cited the OPEC is said to be working towards output cut of at least 1.3 million bpd while markets continue to price in the OPEC output cuts heading into the Dec 6th OPEC + meeting in Vienna.
Meanwhile, broad-based US dollar weakness amid tumbling US Treasury yields keep the buoyant tone intact around the USD-sensitive oil. The US dollar index drops to eight-day lows of 96.38, down 0.60% on the day.
Further, the US-China trade truce combined with a mandated reduction in the Canadian oil supply add to the recovery mode seen in the barrel of WTI. Recall that Alberta province will force producers to cut output by 8.7%, or 325,000 barrels per day (bpd), to deal with a pipeline bottleneck that has led to crude building up in storage.
Gold built on overnight strong up-move and surged to over one-month tops, closer to $1240 level during the Asian session on Tuesday.
After yesterday’s late pull-back, a combination of supporting factors helped the precious metal to regain positive traction for the second consecutive session, also marking the fourth day of up-move in the previous five.
Against the backdrop of a temporary truce in the US-China trade conflict, a sharp decline in the US bond yields exerted some additional downward pressure on the US Dollar and underpinned demand for the dollar-denominated commodity.
In fact, the benchmark 10-year Treasury bond yield fell to three-month lows, farther below the 3.0% mark, amid growing speculations that the Fed will slow the pace of its interest rate hikes in 2019 and remained supportive of the strong bid tone surrounding the non-yielding yellow metal.
Meanwhile, a fresh wave of global risk-aversion trade, as depicted by a sea of red across equity markets, provided an additional boost to the precious metal’s safe-haven status and further contributed to the ongoing positive momentum to the highest level since Oct. 26