Inconstancy in oil prices with geopolitical tensions: Oil prices declined for the second day in a row on Monday,
as unfavourable economic factors continued to weigh on global demand expectations,
outweighing geopolitical concerns in the Middle East and the attack on a Russian fuel export terminal earlier this week.

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Continuing global geopolitical tensions

US interest

Japanese Central Bank

The People’s Bank of China

Continuing global geopolitical tensions

Despite reports of a Ukrainian drone attack on a Russian fuel export terminal, There was no significant change in prices.
The Russian gas-producing company Novatek announced on Sunday that it was forced to suspend
some of its operations at the station located on the Baltic Sea coast due to a fire.

In the Middle East, the Gaza war is intensifying, and the United States bombed an anti-ship missile
that Yemen’s Houthis were preparing to launch toward the Gulf of Aden on Saturday.

Houthi attacks in the Red Sea and Gulf of Aden have disrupted global trade
also led to a decrease in the supply of oil in European and African markets.

Reducing US interest levels date

Last week, Federal Reserve officials announced that they need more data
on inflation before deciding whether to cut interest rates.

These statements came in light of improving consumer sentiment in the United States and a strengthening labour market,
as well as strong retail sales data that indicate a continued strong economy.

Fitch expects the pace of interest rate cuts to be slower than financial market expectations
and adds that it does not expect any cut by the Federal Reserve before June or July 2024,
given the stability of wage inflation and service prices.

The US dollar index saw a decline,
while 10-year US Treasury yields fell from the highest level in more than a month to 4.1111%.

Investors are awaiting the release of the US PMI report on Wednesday,
the fourth-quarter GDP estimates on Thursday, and personal spending data on Friday.

The Japanese Central Bank meeting and its impact on the markets

The yen saw a rally in the Asian market on Monday against several global currencies,
as it began to recover from a two-month low against the US dollar.
The Japanese yen is heading to achieve its first gain in the last six days,
as selling operations stopped with the start of the Central Bank of Japan meeting.

The first meetings of 2024 begin later today in Tokyo, with decisions expected on Tuesday,
and the general outlook is for the continued use of ultra-loose monetary policy tools without any major change.

This rise also supports that yields on US Treasury bonds have stopped rising,
pending more evidence on the path of interest rate cuts by the Federal Reserve during this year.

The People’s Bank of China keeps lending rates the same

Early Monday morning, the People’s Bank of China, headed by Governor Pan Gongsheng,
announced the decision to maintain the initial lending interest rate, according to market expectations.
This decision comes in light of strong data for retail sales and industrial production,
which reflects the gradual recovery of economic growth in the country.

According to the statement, the People’s Bank of China kept the initial interest rate on one-year loans at 3.45%.
According to market expectations, the bank also decided to keep the initial interest
rate on loans for five years unchanged at 4.20%.

This decision comes from the People’s Bank of China after it maintained other key interest rates last week,
and the bank stressed that there is still room for further monetary easing,
but also indicated the need to use all other monetary policy tools.

Inconstancy in oil prices with geopolitical tensions

Inconstancy in oil prices with geopolitical tensions

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