Commodity Capsule: Brent crude oil hovers near $81; gold subdued; copper steady

Commodity Capsule: Oil prices were little changed on Wednesday as investors monitored Red Sea developments.

Some major shippers resuming passage through the area despite continued attacks and broader Middle East tensions.

Brent crude futures are hovering $81 a barrel mark near a month high, while WTI crude oil is trading past $75 a barrel.

Both crude oil benchmarks settled 2 per cent higher in the previous session as further attacks on ships in the Red Sea prompted fears of shipping disruptions.

The prospect of a prolonged Israeli military campaign in Gaza remains a major driver of market sentiment. Israel's Chief of Staff Herzi Halevi told reporters that the Gaza war would go on "for many months".

Oil price declines were capped on Wednesday as markets remain supported by speculation that the US Federal Reserve will begin to lower interest rates in 2024. 

Crude Oil Inventory reports from the American Petroleum Institute industry group and Energy Information Administration are expected on Wednesday and Thursday respectively, due to the Christmas holiday.

Gold prices were flat on Wednesday, as trading remained muted amid expectations of interest rate cuts by the US Federal Reserve in the first quarter of 2024 and a generally weaker dollar.

Spot gold was steady at $2,066/ounce. US gold futures rose to $2,077 per ounce.

Bullion is on track to mark over 13 per cent gain this year - its best since 2020 - on safe-haven inflows driven by wars in Ukraine and the Middle East, coupled with bets for a cut in US interest rates.

Last week's cooler inflation data boosted financial market expectations for an interest rate cut from the Fed next March, with traders now pricing in about an 80 per cent chance.

The dollar index continues to hold near a five-month low, while it eyed its worst yearly performance since 2020.

Copper was steady on Wednesday, supported by a weak dollar and concern over tight global raw material supplies.

LME copper is headed past $8620/metric ton as trade resumed after the Christmas holiday.

The dollar index edged higher, but held close to a five-month low; On track for its worst performance since 2020 against a basket of currencies.

Rising expectations of interest rate cuts from the Feral Reserve dents the appeal of the U.S. currency relative to peers and a weaker dollar makes it cheaper to buy greenback-priced metal.

Spot demand in China was subdued after a burst of restocking seen recently, reversing premiums to discounts of 110 yuan per ton on Tuesday.

That said, the market was still underpinned by concern over tight raw material supplies amid recent mine closures and expectations of tight supply in 2024.

ICE raw sugar ​​settled under 20.50 cents per lb, after sliding to its weakest since early March at 20.03 cents/lb.

Only over 25,000 contracts traded in the spot month as most dealers remained on the sidelines during the holiday period.

Brazil's sugar production remained strong, a major factor for the recent price slide.

Brazil's sugar industry group UNICA said on Tuesday that output more than tripled in the first half of December.

March arabica coffee settled up to $1.95 per lb​, having hit its highest since April last week.

The market remains supported by limited coffee supplies, with low inventories at destination countries, along with weather-related problems for production in Asia and South and Central America.

Traders also worry about delays in the flow of containers used to transport coffee around the world due to the attacks against vessels in the Suez Canal.

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