Oil extends gain on supply jitters, markets await fresh cues

Oil prices extended gains as supply concerns resurfaced with top producers unlikely to be able to boost supply, while markets awaited further cues on inflation with Bank of England governor's speech tomorrow.
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KEY HIGHLIGHTS
  • Political unrest in Ecuador and Libya could tighten oil supply further
  • Gold rises as yields weaken, market awaits more cues
Oil extends gains as major producers flag capacity limits
Oil prices rallied for a third day on Tuesday as major producers Saudi Arabia and the United Arab Emirates looked unlikely to be able to boost output significantly, while political unrest in Libya and Ecuador added to supply concerns.
This comes at the heels of United Arab Emirates' energy minister Suhail al-Mazrouei saying that the nation is producing near capacity, countering expectations that it could help boost supply in a tight market.
Two top producers, Saudi Arabia and the UAE are said to be at, or very close to, near‑term capacity limits.
On investors’ radar was the Bank of England governor Andrew Bailey’s speech on Wednesday that is likely to give cues on inflation.
Inflation in the U.K. hit a 40-year record of 9.1% last month, the highest level of the G7 countries.
Gold rises as yields weaken, market awaits more cues
Gold prices rose on Tuesday helped by weaker U.S. Treasury yields, while markets awaited further cues for a direction as uncertainty about the strength of the economy lingered.
The European Central Bank that is closing in on its first interest rate hike in over a decade will rein in rising borrowing costs for vulnerable eurozone countries.
The central bank is speeding up work on a new, yet to be unveiled, bond-buying programme.
Gold investors are on the lookout for more cues as inflation-hedge gold tends to be impacted by interest rate hikes and policy changes.
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