Commodity Capsule: Oil prices rose for a third straight session on Monday, buoyed by forecasts of a widening supply deficit in the fourth quarter after Saudi Arabia and Russia extended cuts and on optimism of a demand recovery in China.

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Traders will be watching decisions and commentary by central banks, including the US Federal Reserve, this week on interest rate policies, and key economic data out of China.

Brent and WTI have climbed for three consecutive weeks to touch their highest levels since November.

Crude oil is on track for its biggest quarterly increase since Russia's invasion of Ukraine in the first quarter of 2022.

Saudi and Russian output cuts could push the market into a two million barrels per day deficit in the fourth quarter, and subsequent drawdown in inventories could leave the market exposed to further price spikes in 2024, ANZ analysts said in a note.

Gold prices rise with Fed meet, government shutdown in focus

Gold prices rose on Monday as markets bet that the Federal Reserve will keep interest rates on hold this week while growing fears of a US government shutdown spurred some safe-haven demand.

Yellow metal saw some gains in recent sessions as strong inflation and economic activity data failed to convince markets that a US interest rate hike was imminent. But gains were also limited as the dollar raced to six-month highs on the data.

Bullion prices are expected to see some safe-haven demand amid concerns over the US government shutdown.

Lawmakers have about two weeks to pass a new spending bill and avert a shutdown.

Gold futures notched a 0.3 per cent gain last week.

Federal Reserve is broadly expected to keep interest rates on hold after a two-day meeting on Wednesday.

But markets remain wary of the central bank’s outlook, given that recent increases in inflation and resilience in the U.S. economy give it more headroom to raise interest rates further.

Regardless of another hike, the Fed is widely expected to keep rates at over 20-year highs until at least mid-2024. 

Copper & other metals trading in a range amid renewed China jitters

Among industrial metals, copper prices moved little on Monday amid renewed concerns over China, particularly its property market.

LME Copper garnered over 2 per cent last week.

While recent economic indicators showed some signs of a recovery in China, its property market faces a new test this week with more bond payments due for embattled developer Country Garden Holdings.

People’s Bank of China is widely expected to keep its loan prime rates at record lows this Wednesday, as it moves to shore up economic growth. But despite stimulative measures, the outlook for China’s property market remains largely dour.

Iron ore futures edged lower on Monday after solid gains in the previous week, as negative headlines related to China's property sector prompted caution.

Chicago corn futures inched higher on Monday but an upgrade to European production forecasts and expectations for 2nd biggest US corn crop in history kept prices near their lowest since 2020.

Soybean futures stabilised after data showing weak demand from U.S. crushers pushed prices down 1.5 per cent on Friday. Wheat fell amid ample supply from the Black Sea region.

ICE Raw sugar futures rose to a 12-year high on Friday before closing slightly down, as dry weather linked to El Nino looked set to lead to a global deficit in the 2023/24 season. 

October raw sugar ​​touched a 12-year high of 27.59 cents, in the previous session. The contract gained 2.3 per cent in the week.

Concern that drier than normal weather linked to El Nino is likely to curb output in India and Thailand remained a key supportive factor.

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