Oil Prices Hold Steady Ahead of OPEC+ Decision

Oil

Oil prices inched slightly higher during the Asian session to recover part of yesterday's losses and remain in the same range on the broader picture. Market participants are anticipating OPEC+ decision on oil output for May, with expectations of producers keeping the supply discipline. During the past week, oil benchmarks tumbled significantly from a more-than-a-year high amid woes over a slowdown in oil-demand recovery as Europe extended lockdown. Also, fears of oversupply are hitting again with US oil production racing higher. West Texas Intermediate Crude May contract rallied to $61.15, and Brent blend June contract rose to $64.80.

USD

The dollar index which measures the greenback against a basket of major currencies retreated from its highest level since November to trade at 93.19 as US Treasury yields eased. The US 10-year Treasury yields failed to hold yesterday's session gains falling back to 1.708%, giving a spark for a correction in the dollar rally. Investors are looking forward to Biden's infrastructure plan and the jobs report later this week. The dollar extended strong gains against the Japanese yen benefiting from yield differential to trade at a one-year high of 110.96, the EURUSD retraced to $1.1735, and the GBPUSD held steady near $1.3750.

Equities

Major US stock index futures drifted lower ahead of the anticipated infrastructure plan by Biden's administration. Investors are afraid of the means of financing this plan, especially that Biden's team always mentioned raising taxes on corporations and wealthy individuals as an option. Moreover, the continued rally in Treasury yields where the 10-year yields spiked to their highest levels since January 2020, pressured equity markets. The Dow Jones Industrial Average futures declined to 32884, the S&P500 futures dropped to 3940, and Nasdaq futures fell to 12858.

Metals

Precious metals prices fell significantly as the dollar and yields marched higher. The optimistic view over the economic recovery and easing inflationary pressures weighed on gold demand. The price of a gold ounce fell to $1677, the lowest since the 8th of March, the price of a silver ounce tumbled to $23.78, the lowest since mid-December, while palladium futures edged higher to $2620.

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