Moody’s downgrade weighs on oil markets

Traders are cautiously awaiting US ADP Employment Change data, while uncertainty looms over the Federal Reserve's potential interest rate cuts.

By Nadia Elbilassy | @Nadia Elbilassy | 6 December 2023

  • Oil prices remained flat after four consecutive sessions of losses, with investors weighing the effects of extended OPEC+ cuts.

  • The JOLTS report revealed a significant drop in job openings in the world's largest economy, reaching a two-year low of 8.7 million in October.

  • Gold prices stabilized around $2,030, recovering from a brief correction, as the market responded to a weaker US Dollar.

On the Market Watch!

Oil Prices

Oil prices were flat as markets weighed OPEC+ underwhelming cuts, following four consecutive sessions of losses. Investors were assessing the impact of an extension in OPEC+ production cuts on reducing supplies, while also considering concerns about a deteriorating demand outlook in China after Moody’s downgrade of China’s outlook dimmed market sentiment.

WTI traded near $72.50 while Brent crude hovered near $77.35.

Last week, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+), reached an agreement for voluntary output cuts of approximately 2.2 million barrels per day (bpd) for the initial quarter of 2024. This includes the continuation of voluntary cuts by Saudi Arabia and Russia, amounting to 1.3 million bpd.

JOLTS Job Report

The latest JOLTS report showed a decrease in job openings in the largest global economy, dropping to 8.7 million on the last day of October from 9.5 million at the end of the previous month.

This represents the lowest level in two years. The reduced demand for labor has increased the likelihood of a rate cut in March to 56%, up from 35% the previous week, according to the Fed Rate Monitor Tool.

Gold stabilizes

Gold appears to be stabilizing around $2,030, reversing a two-day correction from its peak of $2,144 achieved on Monday. The XAU/USD price is benefiting from a general retreat in the US Dollar, as buyers of the Greenback pause after this week's upward movement. The market is eagerly anticipating the release of top-tier US ADP Employment Change data.

And as traders currently wait on further signals regarding when the Federal Reserve will initiate interest rate cuts.