Oil Prices Rise amid Middle East Tensions

Oil prices climbed nearly 1 percent on Tuesday with some push from the weak dollar and tensions in the Middle East, as well as concerns of steep fall in Venezuelan output.

Oil prices increased almost 1 percent as tensions in the Middle East continue to linger

US West Texas Intermediate crude futures were at $62.59 per barrel, 53 cents higher than their previous close. Meanwhile, Brent crude futures were at $66.56 per barrel, 0.8 percent higher.

“Tensions between Saudi Arabia and Iran gave prices some support,” said Sukrit Vijayakar, who is the director of energy consultancy Trifecta.

Futures traders blamed the overall dollar weakness for the rise in crude oil prices. Whenever the greenback performs weakly, dollar-denominated crude imports become cheaper for countries utilizing other currencies locally. This ideally boosts demand for the commodity.

Additionally, worries over Venezuela’s slumping crude production also fueled rise of prices in oil markets.

The International Energy Agency stated last week that Venezuela was “clearly vulnerable to an accelerated decline.” Venezuela has suffered from an economic crisis that cut off oil production by nearly half since 2005 to less than 2 million barrels per day.

The US crude oil production has risen more than a fifth since the middle part of 2016 and has been looming over oil markets. It has increased to 10.38 million barrels per day.

The US' oil output is now higher than Saudi Arabia’s output, even if the latter has been a top exporter for decades. Russia is the only country that produces more, reaching around 11 million barrels per day, though the US output is expected to exceed Russia’s during the latter part of this year.

Skyrocketing US output has a weakening effect on the production curb led by the Organization of Petroleum Exporting Countries along with nine other producers, who all try to cut production to spur prices. Rising output in Canada and Brazil has also undermined the curb agreement.

Many analysts anticipate global oil markets to turn from slight undersupply last year and early this year into oversupply later this year.

Gold prices slumped ahead of the Fed's meeting

Gold Prices Lower Ahead Fed Meeting

As for the gold commodity, prices inched lower on Tuesday with investors keeping close tabs on the Federal Reserve policy meeting this week, aiming to catch further signals on the pace of future interest rate hikes. The monthly policy decision will be released on Wednesday.

Comex gold futures lost 0.15 percent at $1,315.8 a troy ounce. It was off the previous session’s two-week low of $1,307.4.

The US central bank is widely anticipated to increase rates by a quarter point. Market participants, though, are eyeing on any indications for the pace of monetary policy tightening for the rest of the year.

Gold has been historically sensitive to moves in the US rates. Rises in US interest rates lift the opportunity cost of holding assets that are non-yielding, such as the bullion.

However, investors were cautious over the economic impact of US protectionist policies. The White House is set to unleash up to $60 billion in new tariffs on Chinese imports by Friday. The said tariffs are supposed to target technology, telecommunications, and intellectual property.

Gold prices bounced back for a short time after reports stated that political analytics firm Cambridge Analytica was able to obtain user data from Facebook’s 50 million users without their consent during the 2016 US presidential campaign.

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