Oil Prices Rise Amid Supply Concerns and U.S. Sanctions on Venezuela
Oil prices have surged amid increased concerns over global supply disruptions following Trump’s revocation of Chevron’s license in Venezuela. OPEC+ is considering a production increase, while gold prices fell due to a robust dollar and profit-taking. Recent U.S. economic data showed a rise in GDP and unemployment claims, influencing market sentiment.
Oil prices experienced a significant increase on Thursday, attributed to heightened apprehensions regarding global supply disruptions following President Donald Trump’s revocation of Chevron’s license to operate in Venezuela. Trump’s announcement on his Truth Social platform underscored the removal of a license that had been granted by the previous administration two years earlier.
Additionally, Reuters reported that OPEC+ is deliberating a potential increase in oil production for April, as it continues to evaluate the state of global supplies amid the backdrop of ongoing U.S. sanctions on Venezuela, Iran, and Russia. In trading, Brent April futures rose by 2.1% to $74.04 per barrel, while U.S. crude futures for April increased by 2.5% to $70.35 per barrel.
In financial news, gold prices fell to their lowest levels since February 7, driven down by a strong U.S. dollar. Recent data indicated a quarterly U.S. GDP growth rise of 2.3% for the fourth quarter, in contrast to a 3.1% increase during the third quarter. Additionally, U.S. unemployment claims increased by 22,000 to a three-month high of 242,000, surpassing market expectations of 222,500.
President Trump announced that new 25% tariffs on commodities from Mexico and Canada will take effect in early March, while the dollar index surged by 0.8% to 107.2 during trading. Gold spot prices simultaneously plummeted 1.6%, landing at $2884.2 per ounce, as the U.S. dollar gained strength across multiple currency pairs.
The Canadian dollar weakened by 0.7% against the U.S. dollar, and the Australian dollar dropped by 1.1% in a similar trend. Amid ongoing profit-taking, gold prices declined to two-week lows, moving further away from the crucial psychological threshold of $2900. Market participants are keenly observing the implications of U.S. GDP growth figures and unemployment claims releasing later today.
Gold prices registered a drop of 1.35%, settling at $2877 per ounce, marking the lowest level since February 12, after previously opening at $2916. After a slight increase on Wednesday, the precious metal faced substantial selling pressure, resulting in a notable correction from its peak of $2956.
The dollar maintained its upward momentum, with a 0.25% gain against a range of major currencies, resulting in higher costs for gold priced in U.S. dollars for foreign buyers. Concerns regarding inflation are escalating as Trump prepares to impose tariffs while hinting at further tariffs against the EU and other nations, prompting speculation regarding future monetary policy from the Federal Reserve.
According to the Fedwatch tool, the likelihood of a 0.25% interest rate cut in March currently stands at a mere 2.5%. Traders are closely monitoring forthcoming U.S. GDP growth and unemployment claims, alongside comments from various Fed officials regarding inflation control and monetary strategies. Additionally, gold holdings at the SPDR Gold Trust diminished by 0.86 tons, totaling 906.96 tons, a decrease from August’s high of 907.82 tons.
In conclusion, oil prices have risen due to geopolitical tensions and U.S. sanctions affecting global supply chains. Gold has faced pressure from a strong dollar and shifting market dynamics, pulled lower by profit-taking and tariffs proposed by President Trump. The U.S. economic indicators, including GDP growth and unemployment rates, are critical in shaping market expectations and Federal Reserve policies. Investors remain vigilant in light of these developments.
Original Source: www.economies.com
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