Oil declines due to fears of oversupply, and gold is near the highest level in a week economy

Oil prices fell today, Tuesday, as expectations of a glut in supply during 2026 prevailed, with fears that Russian crude would continue to be affected by sanctions in light of the failure to resolve the talks aimed at ending the Ukrainian war.

Brent crude futures fell 0.82% to $92.85 per barrel, at the time of writing the report, and US West Texas Intermediate crude fell 0.78% to record $85.38.

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Both benchmarks rose by 1.3% yesterday, Monday, with growing doubts about a peace agreement ending the Russian-Ukrainian war, which reduced expectations for the flow of Russian crude supplies without restrictions.

Despite traders’ concerns about Russian shipments, general expectations for supply and demand balances for next year tend towards an abundance of supply.

“In the short term, the main risk is oversupply, and current price levels look weak,” Philip Nova’s chief market analyst, Priyanka Sachdeva, said in a note on Tuesday.

Due to new sanctions imposed on the Russian oil companies Rosneft and Lukoil, and rules preventing the sale of refined petroleum products from Russian crude to Europe, some Indian refiners have reduced their purchases of Russian crude, especially the privately held Reliance Company.

With limited sales options, Russia is looking to increase exports to China.

Russian Deputy Prime Minister Alexander Novak said at a Chinese-Russian business forum in the Chinese capital that Moscow and Beijing are discussing ways to increase Russian oil exports to China.

Market analysts remain generally focused on the potential for broader imbalances in supply and demand.

Deutsche Bank said in a note yesterday, Monday, that it expects a crude oil surplus for 2026 of no less than two million barrels per day, adding that there is no clear path to returning to the deficit even by 2027.

“The future path until 2026 remains a downward path,” analyst Michael Hsueh said.

Gold is rising

Gold prices stabilized during today’s trading after rising to their highest levels in more than a week, following dovish comments from monetary policy makers at the Federal Reserve (the US central bank), which means the possibility of an interest rate cut in December.

Gold fell in spot transactions by 0.15% to $4,129.3 per ounce at the time of preparing this report, after it increased during the day to $4,155.89, its highest level since November 14.

Gold prices increased 1.8% yesterday, Monday.

US gold futures for December delivery rose 0.65% to $4,120.80 an ounce.

Reuters quoted Kelvin Wong, chief market analyst at OANDA, as saying: “Gold is moving according to expectations of an interest rate cut… Since expectations rose (rapidly), this caused a recovery in gold prices.”

According to CME’s Fed Watch tool, investors now expect 81% of interest rate cuts in December, up from 40% last week.

Non-yielding gold usually tends to rise in a low interest rate environment.

This week, major economic data that was postponed due to the government closure is scheduled to be released, including US retail sales, unemployment claims, and producer price data, and it is expected that these data will provide more clarity about the path that the US Central Bank will adopt regarding reducing interest rates.

The dollar held near its highest level in 6 months, which it recorded last week, limiting the gains of gold, which is denominated in the US currency.

As for other precious metals, their performance was as follows:

• Silver fell in spot transactions by 0.56% at $51.05 per ounce.
• Platinum fell 0.38% to $1,546.71.
• Palladium fell 0.2% to $1,390.25.