Brent Slips on Glut Outlook, Trade Jitters

WTI crude oil futures extended its recent losses toward $58 per barrel on Wednesday, hovering near its lowest level since May, pressured by expectations of a global supply glut and concerns over the economic fallout from US-China trade tensions.

The International Energy Agency warned that the oil market could face an unprecedented surplus next year, with supply projected to exceed demand by nearly 4 million barrels per day, a larger glut than previously forecast. The agency attributed the looming oversupply to rising output from OPEC+ and other producers amid persistently weak consumption.

Meanwhile, the US and China exchanged fresh trade blows, fueling concerns that the ongoing tit-for-tat between the two powerhouses could further weigh on global consumption.

Investors now await weekly inventory data for additional demand cues.

Zinc gains in the Asian session after ending the previous session in the red. The three-month zinc contract on the LME rises 0.25% to $2,949.00 a ton. Investors are digesting Chinese plans to sell zinc overseas, which ANZ Research analysts say likely opened an arbitrage window as zinc prices on the London Metal Exchange are significantly higher than in Shanghai. Some Chinese zinc smelters plan to sell to Southeast Asia, and the potential flood of metal to non-Chinese markets has helped to push prices down, ANZ says. (megan.cheah@wsj.com)

Gold prices climbed to around $4,180 per ounce on Wednesday, extending its bullish run to notch a fresh record as investors sought the metal’s safety and ramped up bets of additional US monetary easing.

In the latest escalation of US-China trade tensions, President Donald Trump on Tuesday accused China of engaging in “economically hostile” behavior by halting soybean imports and warned of possible retaliatory measures, including a cooking oil embargo.

The remarks came after China threatened further retaliation following its sanctions on five US units of South Korean shipbuilder Hanwha Ocean.

Continuing to add to broader market anxiety was the ongoing US government shutdown, which a US official said is beginning to weigh on the economy.

Meanwhile, Fed Chair Jerome Powell, speaking at the NABE annual meeting, warned that the sharp slowdown in hiring is increasingly threatening the US economy, hinting at the possibility of two more rate cuts this year.

Crude palm oil prices may remain volatile in the near-term, amid trade tensions and Indonesia's B50 biodiesel mandate, RHB IB analysts Hoe Lee Leng and Iftaar Hakim Rusli say in a note. As China refrains from buying U.S. soybeans, high global soybean stocks and narrowing CPO-soybean oil price gaps may weigh on demand, they say. The two oils often move in tandem due to their usage in similar products. However, a potential La Nina could tighten supply and support prices, and Indonesia's B50 biodiesel mandate could be the biggest price catalyst, they add. RHB remains neutral on the sector, and pegs Johor Plantations, IOI Corp., SD Guthrie, Sarawak Oil Palms, London Sumatra Indonesia and First Resources as its top picks. (yingxian.wong@wsj.com)

After solid 3Q production result from Rio Tinto, "all eyes move to the 2025 capital markets day" on Dec. 4, Macquarie analysts say in a note. The analysts reckon new CEO Simon Trott will use that briefing to "reinforce a simplified operating model" and efforts to reduce costs. Macquarie's earnings estimates for Rio are little changed following the 3Q result. The bank reiterates its neutral rating and A$115.00 target on the stock. "Rio remains the preferred large cap miner," its analysts say. Rio is up 1.1% in Sydney at A$128.78. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

After solid 3Q production result from Rio Tinto, "all eyes move to the 2025 capital markets day" on Dec. 4, Macquarie analysts say in a note. The analysts reckon new CEO Simon Trott will use that briefing to "reinforce a simplified operating model" and efforts to reduce costs. Macquarie's earnings estimates for Rio are little changed following the 3Q result. The bank reiterates its neutral rating and A$115.00 target on the stock. "Rio remains the preferred large cap miner," its analysts say. Rio is up 1.1% in Sydney at A$128.78. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)