Oil prices fell on Tuesday as concerns about abundant supply outweighed worries over continued sanctions on Russian shipments, while peace talks aimed at ending the war in Ukraine showed no progress.

Brent crude dropped 33 cents, or 0.5%, to 63.04 dollars a barrel by 11:46 GMT. US West Texas Intermediate declined 32 cents, or 0.5%, to 58.52 dollars.

Both benchmarks had gained 1.3% on Monday, after growing doubts about reaching a peace agreement between Russia and Ukraine boosted expectations that constrained flows of sanctioned Russian crude and fuel would persist.

Despite market anxiety over Russian shipments, broader 2026 supply–demand projections point to a more oversupplied market, with multiple forecasts suggesting supply growth will outpace demand next year.

Priyanka Sachdeva, senior market analyst at Phillip Nova, said in a Tuesday note: “In the near term, the main risk lies in oversupply, and current price levels appear vulnerable to pressure.”

Amid new sanctions targeting Russia’s state-owned Rosneft and private producer Lukoil, along with rules banning refined products made from Russian crude from entering Europe, some Indian refiners — including private refiner Reliance — have reduced purchases of Russian oil.

With limited alternative buyers, Russia is seeking to expand shipments to China. Deputy Prime Minister Alexander Novak said Tuesday that Moscow and Beijing are discussing ways to increase Russian oil exports to China.

Giovanni Staunovo, analyst at UBS, noted: “Market participants are still assessing whether the latest European and US sanctions will meaningfully affect Russia’s oil exports.”

Even so, analysts are primarily focused on the risk of wider imbalances in supply and demand. Deutsche Bank projected a surplus of at least two million barrels per day in 2026, with no clear path back to deficit conditions before 2027, according to a Monday report.

“The trajectory into 2026 remains skewed to the downside,” said analyst Michael Shoh.

Expectations of a weaker market next year continue to outweigh the supportive effect of stalled peace negotiations, which had previously helped prices stabilize. A peace agreement could ultimately lift sanctions on Moscow, potentially releasing large volumes of previously constrained supply into the market.

However, oil continues to find some support from growing expectations that the Federal Reserve will cut interest rates at its December 9–10 policy meeting, after several Fed officials signaled openness to easing.

A rate cut could stimulate economic activity and strengthen oil demand.

“Oversupply concerns are pulling the market one way, while hopes of stronger demand driven by monetary easing are pulling it the other,” Sachdeva said.

Silver prices rose in European trading on Tuesday, extending their gains for a second consecutive session, supported by growing expectations that the Federal Reserve will cut interest rates in December.

Those expectations strengthened after a series of less hawkish remarks from US policymakers. Investors now await additional delayed economic data from the United States to help refine rate-cut pricing.

Price Overview

• Silver prices today: The metal climbed 0.75% to 51.76 dollars an ounce, the highest in a week, up from an opening level of 51.37 dollars. It also recorded an intraday low of 50.81 dollars.

• Upon settlement on Monday, silver gained 2.75% in its first advance in three sessions, rebounding from a two-week low at 48.64 dollars an ounce.

US Interest Rates

• Fed Governor Christopher Waller said Monday that the labor market is weak enough to justify another quarter-point rate cut in December, though any further action will depend on a wave of delayed data following the government shutdown.

• New York Fed President John Williams said Friday he expects the central bank to begin lowering its benchmark rate from here, noting that labor-market weakness now poses a greater economic threat than elevated inflation.

• Following these comments, CME’s FedWatch tool showed the probability of a 25-basis-point rate cut in December rising from 43% to 80%, while the probability of no change fell from 57% to 20%.

• To refine these expectations, investors are awaiting delayed US data due later today, including producer-price figures and September retail-sales numbers.

Outlook for Silver

We at Economies.com expect that if incoming US data proves less hawkish than markets currently assume, expectations for a December rate cut will strengthen further—providing additional positive momentum for non-yielding assets, particularly precious metals such as gold and silver.

The US dollar held steady on Tuesday as investors continued weighing the likelihood of a Federal Reserve rate cut next month following dovish remarks from policymakers, while the Japanese yen remained in focus amid the possibility of official intervention.

On Monday, Fed Governor Christopher Waller said the labor market was now weak enough to justify another quarter-point rate cut in December, though any further action would depend on a wave of delayed economic data caused by the federal government shutdown.

His comments followed similar remarks from New York Fed President John Williams on Friday.

According to CME’s FedWatch tool, traders now price an 81% chance of a rate cut next month, up sharply from 42% a week earlier. The shift underscores the challenge markets face in pricing short-term rate expectations amid the lack of data during the longest government shutdown in US history, which ended on 14 November.

So far, the impact of this sharp repricing has been limited for the dollar. The euro last traded at 1.1530 dollars after a slight rise on Monday night, while the British pound climbed about 0.2% to 1.3115 dollars.

The dollar index — which tracks the US currency against a basket of major peers — was steady at 100.13, holding onto last week’s roughly 1% gain.

Francesco Pesole, currency strategist at ING, said year-end portfolio rebalancing flows ahead of the Thanksgiving holiday may limit dollar weakness. But he added in a note to clients: “Barring a hawkish repricing in markets, the dollar looks too strong relative to short-term rate differentials, and we see significant downside risks.”

Fed officials remain divided on the next move as the central bank still lacks complete economic data.

Investor sentiment was also supported by signs of improved US-China relations. President Donald Trump said Monday that ties with China were “extremely strong” following a phone call with President Xi Jinping.

Yen traders on alert for possible intervention

Despite a mild dip in the dollar this week, the Japanese yen remained under pressure, trading at 156.51 per dollar — close to last week’s 10-month low of 157.90.

Investors are watching closely for any signal of official action from Tokyo, given that the yen has weakened by roughly 10 yen since early October after the appointment of Sanai Takaichi — known for her expansionary fiscal stance — as Japan’s new prime minister.

Pesole said thin liquidity surrounding the Thanksgiving holiday could provide favorable conditions for the Bank of Japan to intervene in the dollar/yen rate, ideally after a market-driven correction.

He added: “US data could trigger that correction, but in our view, not today.”

US retail sales and producer-price data are due later on Tuesday.

In other currencies, the New Zealand dollar slipped to 0.5595 dollars after falling more than 2% this month ahead of an expected rate cut by the Reserve Bank of New Zealand on Wednesday. The Australian dollar traded at 0.6453 dollars, down 0.15% on the day.

Gold prices rose in European trading on Tuesday, extending gains for a second straight session and hitting a two-week high, with the metal shrugging off a stronger US dollar in the foreign exchange market.

Less hawkish remarks from several Federal Reserve officials boosted expectations of a December rate cut, while investors await further US economic data.

Price Overview

• Gold prices climbed 0.5% to 4,155.81 dollars — the highest since 14 November — from an opening level of 4,134.80 dollars, after touching an intraday low of 4,122.78 dollars.

• On Monday, gold settled up 1.75%, its first gain in three sessions, supported by improved investment demand for the precious metal.

US Dollar

The dollar index rose 0.1% on Tuesday, resuming gains after a brief pause and moving once again near six-month highs, reflecting renewed strength in the greenback against major and minor currencies.

The rise comes as investors continue buying the dollar as the most attractive asset available, despite the recent cautious tone from several Fed officials.

US Interest Rates

• Fed Governor Christopher Waller said Monday that the labor market is now weak enough to justify another 25-basis-point rate cut in December, although any action afterward will depend on a wave of delayed data following the government shutdown.

• New York Fed President John Williams said Friday he expects the central bank to cut its main policy rate from here, arguing that labor-market weakness poses a bigger economic threat than elevated inflation.

• After these comments — and according to CME’s FedWatch tool — market pricing for a 25-basis-point December rate cut jumped from 43% to 80%, while expectations for no change fell from 57% to 20%.

• Investors now await delayed US data on producer prices and September retail sales, due later today.

Gold Outlook

Kelvin Wong, market analyst for Asia-Pacific at OANDA, said gold has been driven mainly by rate-cut expectations over the past two weeks. As those expectations climbed rapidly, he noted, they helped lift gold in the short term.

Wong added that market participants will now pay much closer attention to any US demand-related economic indicators.

SPDR Holdings

Holdings in the SPDR Gold Trust — the world’s largest gold-backed ETF — rose by 0.29 metric tons on Monday, marking a second straight daily increase and bringing total holdings to 1,040.86 metric tons.