Oil prices were steady on Tuesday as traders weighed the risks from Ukrainian drone strikes on Russian energy sites and rising tensions between the United States and Venezuela.

Brent crude futures slipped 18 cents, or 0.3%, to $62.99 a barrel by 10:17 GMT. US West Texas Intermediate fell 13 cents, or 0.2%, to $59.19 a barrel.

Both benchmarks had gained more than 1% on Monday, with WTI nearing a two-week high.

Jahnef Shah, an analyst at Rystad Energy, said: “The downward pressure from a global supply surplus is being balanced by accelerated strikes on Russian energy infrastructure over the weekend, along with escalating US–Venezuela tensions.”

He added: “The geopolitical risk premium has risen over the past few sessions, with ships carrying the Russian flag also coming under attack.”

On Monday, the Caspian Pipeline Consortium (CPC) said it had resumed oil shipments from a mooring point at its Black Sea terminal after a major Ukrainian drone strike on 29 November.

Separately, US President Donald Trump said on Saturday that “the airspace over and around Venezuela” should be considered closed, injecting fresh uncertainty into the oil market given Venezuela’s status as a key crude supplier.

Tamas Varga, analyst at PVM Oil Associates, said: “Attention is also on the Ukrainian peace talks, which could eventually lead to Russia increasing its crude and product exports again, although that path is likely to be long.”

On the diplomatic front, Trump’s special envoy, Steve Witkoff, and his son-in-law Jared are set to meet Russian President Vladimir Putin on Tuesday to discuss possible ways to end the war.

Russian presidential envoy Kirill Dmitriev will also meet Witkoff in Moscow on Tuesday, according to sources familiar with the US–Russia discussions.

Kremlin spokesman Dmitry Peskov told Indian reporters on Tuesday that India’s reduced imports of Russian crude may last “only briefly,” with Moscow planning to increase supplies to New Delhi.

Russia is India’s largest oil supplier, and India is the world’s third-largest crude importer and consumer. However, New Delhi is set to cut its Russian crude purchases this month to the lowest level in at least three years after Washington imposed sanctions on two major Russian producers, Rosneft and Lukoil.

The euro held steady on Tuesday ahead of eurozone inflation and unemployment data, while the dollar rose against the yen following a successful Japanese government bond auction that eased investor nerves after a sharp global fixed-income selloff on Monday.

The euro was unchanged at $1.1606 before the inflation report due at 10:00 GMT, with markets expecting the figures to have little impact on the outlook for European Central Bank rate cuts.

Meanwhile, talks aimed at ending the war in Ukraine continued.

Francesco Pesole, FX strategist at ING, said: “Today’s CPI numbers are not expected to significantly alter market expectations for ECB rates… If anything, the impact leans slightly negative for the euro, but we foresee a neutral effect on currencies overall.”

The dollar climbed 0.37% against the yen to ¥156.01 after touching a two-week low on Monday, supported by strong demand in a 10-year Japanese government bond auction—the highest since September—which helped spark a rebound in super-long-dated bonds after their yields had hit record highs earlier in the day.

“The auction results seem to have provided a degree of reassurance to the market,” said Shoki Omori, chief desk strategist at Mizuho in Tokyo.

Stocks, bonds, cryptocurrencies, and the dollar all weakened on Monday after Bank of Japan Governor Kazuo Ueda said the central bank would examine the “pros and cons” of a rate hike at its next meeting. His remarks pushed two-year Japanese yields above 1% for the first time since 2008 and triggered broad ripple effects across global bond markets.

Further pressure came from softer-than-expected US manufacturing data, increasing expectations that the Federal Reserve will cut rates this month. Fed funds futures now price an 87% chance of a 25-basis-point cut at the 10 December meeting, up from 63% a month earlier, according to the CME FedWatch tool.

The US Dollar Index held steady at 99.48 after touching a more-than-two-week low on Monday.

Sterling was also flat at $1.3215, after hitting a one-month high on Monday.

In a separate development, the Bank of England on Tuesday reduced the amount of capital it estimates lenders must hold, aiming to boost credit supply and support the economy—the first such reduction in bank capital requirements since the financial crisis.

Gold prices declined in European trading on Tuesday for the first time in three sessions, pulling back from their six-week high as corrective moves and profit-taking picked up, alongside pressure from a recovering US dollar against a basket of global currencies.

Despite strong expectations for a US rate cut in December, investors are awaiting several key economic releases from the United States this week, which are likely to guide the Federal Reserve’s policy outlook.

Price overview

• Gold today: Prices fell 0.95% to $4,191.85 from an opening level of $4,231.75, after touching an intraday high of $4,236.02.

• Gold settled Monday up 0.35%, marking a second consecutive daily gain and hitting a six-week high at $4,264.60 an ounce amid strong safe-haven demand.

US dollar

The US Dollar Index rose about 0.1% on Tuesday, attempting to recover from a two-week low and heading for its first gain in seven sessions, reflecting a rebound in the greenback against major and minor currencies.

Beyond dip-buying, the dollar’s recovery comes as markets speculate that Federal Reserve Chair Jerome Powell will remain cautious about aggressively easing monetary policy and cutting interest rates.

US interest rates

• Kevin Hassett, now seen as the leading contender to replace Jerome Powell as Fed Chair, said interest rates “should be lower.”

• According to the CME FedWatch Tool, the probability of a 25-basis-point US rate cut in December is steady at 87%, while the likelihood of no change in rates is stable at 13%.

• To reassess these probabilities, investors are closely monitoring this week’s US economic releases, particularly data on private-sector employment and the personal consumption expenditures index—the Fed’s preferred inflation gauge.

Gold outlook

Tim Waterer, chief market analyst at KCM Trade, said: “Gold is underperforming today, but the broader picture remains intact—a picture that includes expected US rate cuts, which should support gold from a yield perspective.”

SPDR Gold Trust

Holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, rose by 4.58 metric tons on Monday, bringing total holdings to 1,050.01 metric tons—the highest since 22 October.

The euro slipped slightly in European trading on Tuesday against a basket of global currencies, giving up its two-week high against the US dollar amid modest corrective moves and profit-taking.

With uncertainty persisting over the likelihood of a European Central Bank rate cut in December, investors are awaiting Europe’s key November inflation readings later today to gain clearer evidence on the ECB’s monetary-easing outlook.

Price overview

• EUR/USD today: The euro dipped by less than 0.1% to $1.1603 from an opening level of $1.1609, after touching an intraday high of $1.1614.

• The euro ended Monday slightly higher against the dollar, having reached a two-week high at $1.1653 as expectations for a US rate cut in December continued to increase.

European interest rates

• Sources told Reuters that the European Central Bank is inclined to keep interest rates unchanged at its December meeting.

• Money-market pricing for a 25-basis-point ECB rate cut in December remains steady around 25%.

European inflation

To reassess these odds, investors are awaiting Europe’s key November inflation data, which will show how much pressure policymakers at the ECB still face.

At 10:00 GMT, the eurozone consumer price index is due, with market expectations pointing to a 2.1% annual increase in November, matching the previous reading. Core CPI is expected to rise 2.4%, also unchanged from the prior figure.

Outlook for the euro

At Economies.com, we expect that if inflation data comes in cooler than markets currently anticipate, the probability of a December ECB rate cut will rise — implying renewed downward pressure on the euro in the foreign-exchange market.