Oil prices retreated on Tuesday after hitting 18-month highs on rising Asian demand. U.S. WTI crude dropped 10 cents to trade at $52.73 per barrel while international Brent crude traded at $55.67 per barrel, a price nearly identical to its last closing price. The drop in prices may be partially due to profit-taking after traders took advantage of the recent price surge. Much weight has been given to OPEC’s recent commitment to curb output, a move which traders anticipate will keep supporting oil prices. Nevertheless, despite early signs that the cuts will be implemented as agreed, traders remain nervous that the deal could collapse or the member states could fail to comply, which would likely send oil prices spiraling downward.
Currency Markets Waiting for News
The euro remained flat on Tuesday, trading at $1.0629, while spot gold inched higher to $1,163 per ounce, as traders waited for news from the U.S. Federal Reserve regarding its expected interest rate hike. The dollar remained flat against the yen, trading at 115.140 after climbing to 116.120 overnight, a high not seen since February 2016. The Canadian dollar also remained stable on Tuesday, trading at $1.3124 per dollar after hitting a two-month high overnight.
Traders have been speculating that the Fed will raise interest rates more times than expected in 2017 due to Donald Trump’s presidential victory, a prediction that has pushed the dollar higher in recent weeks. Traders are waiting to see whether Trump’s victory will cause the Fed to rethink the country’s growth and inflation outlook and to change its policies accordingly.