*Dollar Stutters As US Tax Bill Stirs Anxiety Over Debt
Oil prices slipped for a second session on Tuesday on increasing expectations members of the Organisation of Petroleum Exporting Countries and their allies, known as OPEC+, will decide to increase their output at a meeting later this week.
Brent crude futures shed 24 cents, or 0.4%, to $64.50 a barrel by 0507 GMT, while U.S. West Texas Intermediate (WTI) crude was down 29 cents, or 0.5%, at $61.24 a barrel.
The WTI contract did not settle on Monday because of the U.S. Memorial Day holiday.
“Crude oil edged lower as the market contemplated the outlook for rising OPEC supply,” Daniel Hynes, senior commodity strategist at ANZ, said in a note.
OPEC+ will likely finalise July output at their meeting, which sources have previously told Reuters will entail a production increase of 411,000 barrels per day.
Russian Prime Minister Alexander Novak said on Monday that OPEC+ had yet to discuss hiking output. The group is likely to finalise output quotas in an online ministerial meeting on May 28.
Eight OPEC+ members that had pledged additional voluntary cuts are now expected to meet on May 31, one day earlier than previously scheduled, three sources within the group told Reuters on Monday.
OPEC+ members had already agreed to accelerate oil output increases for a second month in June.
However, U.S. President Donald Trump’s decision to extend trade talks with the European Union until July 9 alleviated immediate fears of tariffs that could suppress fuel demand, placing a lid on losses.
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Iran set the official selling price for its light crude oil grade for Asian buyers at $1.80 a barrel above the Oman/Dubai average for June, the state-owned National Iranian Oil Company (NIOC) said. The price it set for May was a premium of $1.65.
Iranian President Masoud Pezeshkian said on Monday that Iran would be able to survive if negotiations with the U.S. over its nuclear programme fail to secure a deal.
If nuclear talks between the U.S. and Iran fail, it could mean continued sanctions on Iran, which would limit Iranian supply and be supportive of oil prices.
Dollar Stutters As US Tax Bill Stirs Anxiety Over Debt; Yen Gains
The dollar struggled on Tuesday to regain its footing as investor concerns over a sweeping tax and spending bill and its implications for the U.S. debt profile added to the recent erosion of confidence in American assets.
The euro gained on Monday while the United States was on holiday, after U.S. President Donald Trump delayed the imposition of tariffs on Europe. The yen was underpinned by comments from the Bank of Japan governor that kept alive chances for interest rate hikes later this year.
Attention now turns to debate in the U.S. Senate on Trump’s tax-cut bill that is expected to add to the debt pile in the world’s largest economy. Markets have been sensitive to Trump’s proposal, particularly after Moody’s downgrade of the U.S. sovereign credit rating on May 16.
“There’s a whole lot of trends going on at the moment that are militating against the dollar and also suggesting that the outlook for the globe is pretty poor,” said Michael McCarthy, chief executive officer of Moomoo Australia. “Bond markets are telling us that the current economic weakness is going to get worse.”
The U.S. House of Representatives last week passed a version of Trump’s tax-cut bill that is calculated to add about $3.8 trillion to the federal government’s $36.2 trillion in debt over the next decade, according to the Congressional Budget Office.
Trump said on Sunday that the bill is likely to see “significant” changes as it is debated in the Senate.
Investor confidence in U.S. assets has been undermined in recent months in the wake of the U.S. president’s erratic global tariff policies.
In the latest example, Trumpbacked down from threatened 50% duties on European Union shipments from June 1, sending the euro rallying to a one-month high.
The single currency could become a viable alternative to the dollar if governments can strengthen the bloc’s financial and security architecture, European Central Bank President Christine Lagarde said on Monday.
Bond yields, particularly on the long end, have surged around the world as concerns mounted over growing fiscal deficits in advanced economies, led by the U.S. and Japan. Japanese Finance Minister Katsunobu Kato said on Tuesday the government is closely watching the debt market.
On the monetary front, BOJ Governor Kazuo Ueda said the central bank must be vigilant to rising consumer prices in Japan, signaling its readiness to keep hiking rates.
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The greenback dropped 0.3% to 142.39 yen. The dollar index , which tracks the greenback against other major trading partners, slid 0.1%, down for a third-straight session.
The European single currency was up 0.1% to $1.1397, trading near the highest since April 29. Sterling was little changed at $1.3571 .
The kiwi dollar was edged 0.1% lower to $0.5994 after touching a six-month high of $0.6031 on Monday. The Reserve Bank of New Zealand will meet on Wednesday where it is widely expected to cut interest rates to 3.25%, though uncertainty remains about its next moves.
