Oil prices continued their descent on Monday as production remains near record levels and signs that US shale producers are withstanding the current slump in prices. The number of active oil rigs in the US rose last week adding to the supply glut that has been made worse by expectations that Iran will return to the market next year.
Brent crude futures hit an 11-year low today of $36.17 per barrel, while WTI oil futures were trading near 6-year lows at $34.37 per barrel.
Gold prices fared better though as a sharp drop in Wall Street and in European equities on Friday made the precious metal more attractive on Monday. Gold was up 0.4% at $1070.53 per ounce in late Asian session.
Chinese equities benefited from thin trading ahead of the holiday period and China’s CSI 300 index was up 2.6% in late Asian trading. However, shares in Japan were in negative territory as investors were left disappointed on Friday following the Bank of Japan’s decision to make only minor tweaks to its quantitative easing program.
The yen held on to most of its gains from Friday and was being supported by the absence of any further monetary easing on the horizon. The dollar was slightly firmer on last week’s close at 121.32 yen in late Asian session today.
The euro was up slightly on Monday at 1.0868 dollars but down from an earlier high of 1.0872 dollars. The pound also edged higher against the dollar and was trading at 1.4908 dollars in late Asian session.
Comments on Sunday from Bank of England hawk Martin Weale that an interest rate hike now looks “slightly less immediate” given the unexpected “pause in wage growth” kept the pressure on the pound, particularly against the euro, which moved up to 0.7286 against the UK currency.
The rest of the day is looking extremely quiet ahead of the Christmas holidays at the end of the week. The only significant data coming out today is the Eurozone consumer confidence survey for December. Trading is likely to remain thin for the rest of the week with movements in commodity prices likely to dominate the trading theme.