Crude oil prices fell amid expectations of oversupply and a stronger US dollar. Copper prices retreated as traders, while relieved about easing supply concerns, focused on the Federal Reserve’s interest rate trajectory. Gold prices also dropped.

Crude Oil: Oil Prices Halt Four-Day Rally Amid Stronger Dollar and Oversupply Concerns

Oil prices declined, ending a four-day winning streak, weighed down by a stronger US dollar and expectations of an oversupply.

WTI fell by 0.8%, closing below $61 per barrel.

Concerns over elevated valuations have hindered the rally in global equities, while the US dollar rose to its highest level in more than five months, pressuring crude oil and other dollar-denominated commodities.

Jon Byrne, an analyst at Strategas Securities, attributed the decline in oil prices to ‘dollar funding pressures and their secondary effects on global liquidity, which in turn impact global growth.’

Over the weekend, OPEC+ announced plans to pause production quota increases in the first quarter. This move comes as market observers anticipate a global crude oil surplus.

WTI has fallen nearly 16% year-to-date due to increased production from OPEC+ and other oil-producing nations. Prices rebounded from a five-month low following US sanctions on two major Russian oil companies but have since given up some gains.

Data tracked by Bloomberg showed that sanctions led to a sharp decline in Russia’s seaborne crude oil exports, marking the largest drop since January 2024.

Nevertheless, some industry insiders remain skeptical about the effectiveness of the sanctions.

Torbjörn Törnqvist, CEO of Gunvor Group, stated in an interview on Tuesday: ‘Ultimately, you will see that disrupted Russian crude oil will find its way back into the market through whatever means.’

The WTI crude oil futures price for December delivery fell by 0.8%, settling at $60.56 per barrel.

January Brent crude oil declined by 0.7%, closing at $64.44 per barrel.

Base metals

Copper prices retreated further from record highs as traders focused on the uncertainty surrounding the Federal Reserve’s interest rate outlook, while Chile’s state copper company alleviated market concerns about supply.

Base metal prices generally fell, with copper prices plunging by 2.4% at one point. After global trade tensions eased, investors shifted their focus back to Federal Reserve policies and economic trends.

Recent statements by several Federal Reserve officials have reflected differing views on the interest rate outlook. The president of the Chicago Federal Reserve noted he is more concerned about inflation than the labor market.

By the close of trading, LME copper futures had dropped by 1.8%, to $10,663.5 per ton.

LME aluminum futures fell by 1.5%, to $2,859 per ton;

LME nickel futures declined by 0.4%, to $15,075 per ton;

LME zinc futures fell 0.4% to USD 3,088.5 per tonne;

LME tin futures dropped 0.7% to USD 35,814 per tonne;

LME lead futures declined 0.2% to USD 2,023.5 per tonne.

Precious Metals

Gold prices fell due to a stronger US dollar and uncertainty over the Federal Reserve’s interest rate path.

An index measuring the performance of the US dollar is heading towards its longest winning streak since July, pressuring dollar-denominated commodities.

Gold prices have surged significantly since the end of August as markets bet on further interest rate cuts by the Federal Reserve, but any shift in the Fed’s rate path could hinder the rally.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated that today’s decline in gold prices was due to “the Fed’s cautious stance and a stronger US dollar.”

Spot gold fell 1.7% to USD 3,934.43 per ounce as of 5:05 PM Eastern Time.

Spot silver dropped 2% to USD 47.1135 per ounce.