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Today Fundamental Analysis: Oil prices fall on optimism of improving energy supplies
Oil prices fell on Monday as hopes for improved global supply outweighed ongoing geopolitical risks. Brent crude declined 0.8% to $103.76 per barrel, while WTI dropped 1.3% to $90.64. Optimism followed President Trump’s announcement of an energy ceasefire between Russia and Ukraine, alongside expectations that additional Russian diesel supplies could reach global markets under a US–Russia agreement.
However, the downside may remain limited by supply disruptions and geopolitical uncertainty. Hurricane Isaias threatened US Gulf energy production, while Houthi attacks on Saudi Arabia heightened Middle East tensions amid the ongoing US–Iran conflict. As a result, oil prices are likely to remain volatile, balancing hopes for increased supply against the risk of further disruptions.
In the US, stock futures rose on Monday, with S&P 500 futures up 0.3%, Nasdaq 100 futures gaining 0.4%, and Dow futures advancing 0.3%, following a positive week on Wall Street. Technology stocks continued to support sentiment.
Gold recovered from its two-month low near $4,067, attempting to hold above $4,200 as softer Treasury yields and falling oil prices eased inflation concerns, supporting the non-yielding metal despite a modest rebound in the US dollar. However, escalating Middle East tensions, including attacks on Saudi targets and the possibility of greater US involvement, are adding to market volatility and safe-haven demand.
Investors are now focused on Wednesday’s US CPI report for clues about the Federal Reserve’s next move. Markets increasingly expect the Fed to hold rates steady at its upcoming meeting, while core inflation is forecast to remain broadly stable, although upside risks persist. Softer than expected inflation could support gold by weakening the dollar and yields, while stronger data could renew pressure on the metal.
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