S&P 500 ekes out another record high as Netflix and chipmakers leap

Jan 24 – The S&P 500 climbed to its fourth straight record high close on Wednesday, as Netflix surged following blowout quarterly results and a strong report from ASML fueled gains in chipmakers.

Riding optimism about Wall Street’s most valuable companies, Microsoft hit an all-time high, lifting its market value above USD 3 trillion for the first time.

The Nasdaq touched its highest since January 2022 and is now less than 4% below its record-high close in November 2021.

Netflix jumped 10.7% to a two-year high after strong subscriber growth cemented investor confidence the firm has won the streaming wars with its password-sharing crackdown and a strong content slate.

The S&P 500 communication services index, which includes Netflix, rose 1.2% and also hit a two-year high.

Alphabet and Meta Platforms, part of the so-called Magnificent Seven group of heavyweights that drove much of 2023’s recovery in the S&P 500, each gained over 1%.

“Technology-enabled companies – the Magnificent Seven in particular and the AI theme – last year put up some ridiculous earnings and guidance. We will see over the next 10 days how that plays out, but early indications are certainly pretty positive,” said Mike Dickson, head of research at Horizon Investments.

The S&P 500 climbed 0.08% to end the session at 4,868.55 points.

Even as the S&P 500 rose, declining stocks outnumbered rising ones within the index by a 2.5-to-one ratio.

The Nasdaq gained 0.36% to 15,481.92 points, while the Dow Jones Industrial Average declined 0.26% to 37,806.39 points.

Volume on US exchanges was relatively heavy, with 11.6 billion shares traded, compared to an average of 11.4 billion shares over the previous 20 sessions.

Tesla dipped 0.6% and weighed on the S&P 500. The carmaker was scheduled to report December-quarter results after the closing bell.

The Philadelphia SE semiconductor index rose 1.54% to a record high after upbeat results from manufacturing equipment maker ASML Holding pointed to a recovery in global chip demand.

Nvidia and Broadcom both jumped more than 2% and hit record highs. Traders exchanged over USD 34 billion worth of Nvidia shares, more than any other stock on Wall Street, according to LSEG data.

AT&T dropped 3% after forecasting annual profit below expectations, while DuPont De Nemours slumped 14% after forecasting a fourth-quarter loss.

On the data front, a survey showed business activity picked up in January and inflation appeared to abate, suggesting that the economy kicked off 2024 on a strong note.

A resilient US economy and uncertainty over the timing of interest rate cuts have led investors to reassess their bets on how quickly the Federal Reserve will cut rates this year.

Traders now see an 85.5% chance of a rate cut in May, according to CME Group’s FedWatch Tool. Traders previously expected a rate cut in as early as March.

(Reporting by Ankika Biswas and Johann M Cherian in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Anil D’Silva, Devika Syamnath, Maju Samuel, and David Gregorio)

Yields rise on jitters ahead of GDP data, Fed meeting

NEW YORK, Jan 24 – Treasury yields rebounded on Wednesday as investors demanded a higher risk premium after a strong reading of US business activity before key data later this week and a Federal Reserve meeting next week that could suggest a path ahead for rate cuts.

Yields trimmed initial declines after a flash reading by S&P Global showed US business activity picked up this month and inflation appeared to abate, with prices charged by companies for their products sliding to a more than 3-1/2 year low in a sign the American economy kicked off the year on a strong note.

Yields later shot higher after the Treasury Department sold USD 61 billion of five-year notes at auction for a high yield of 4.055%, or higher than trading at the bidding deadline.

In addition to the first reading on Thursday of US gross domestic product for 2023 and on Friday the Personal Consumption Expenditures index (PCE) on inflation, the market is assessing rising Treasury supply, said Andrzej Skiba, head of the BlueBay US fixed income team at RBC Global Asset Management.

“When you combine a bit of jittery price action ahead of quite a lot of data over the next two sessions with the realization that there’s going to be pretty heavy Treasury issuance in the coming weeks, that is putting some pressure on Treasury yields,” Skiba said.

Treasury supply has quickly turned positive from negative, he said. “We’re going to be USD 100 billion positive this coming month and that’s only going to step up,” Skiba said.

The Treasury Department will issue a general financing estimate next Monday and details on any auction size increases on Wednesday.

The two-year Treasury yield, which reflects interest rate expectations, rose 3.2 basis points to 4.380%, while the benchmark 10-year yield added 4 basis points to 4.182%.

The difference in yields on two- and 10-year notes was at -20.0 basis points as the yield curve flattened further. The shorter-dated security’s yield has been higher than the longer-dated, or inverted, since July 2022 in what’s proven in the past to be a recession harbinger.

While the market last year had recession worries “the concern now is we’ve never had the Fed easing in a full employment environment,” said Jimmy Chang, chief investment officer at the Rockefeller Global Family Office in New York.

“There’s still too many people believing that the first rate cut could happen in March. It will be interesting to see how the Fed manages that expectation at the conclusion” of the policymaker’s meeting next week, Chang said.

The odds that policymakers cut rates in March have fallen to 41.5% from just over a 75% probability a month ago, according to CME Group’s FedWatch Tool, after Fed officials last week pushed back on expectations of up to 150 basis points of cuts this year.

The Treasury will sell USD 41 billion of seven-year notes on Thursday.

The yield on the 30-year Treasury bond was up 3.7 basis points to 4.416%.

The breakeven rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.281%.

The 10-year TIPS breakeven rate was last at 2.302%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

(Reporting by Herbert Lash; Editing by Andrea Ricci and Ros Russell)

Wall Street maps out 2024 election impact as Trump vs Biden looks likely

NEW YORK, Jan 24 – Some investors are already gaming out how the US 2024 presidential election could impact markets, as former president Donald Trump’s victory in the New Hampshire Republican primary brings him closer to a rematch with Democratic President Joe Biden

Any calculation of how stocks, bonds, and currencies could react to the results of the November vote comes with caveats – especially since it’s early in the year and betting markets are split on which candidate will prevail. Most investors also believe drivers such as Federal Reserve policy, the economic cycle, and corporate earnings will ultimately matter more for markets over the long term.

Nevertheless, expectations for politically fueled moves in asset prices around the 2024 vote are high among some strategists, with Goldman Sachs saying the election could be a “major market event.”

Sameer Samana, senior global market strategist at the Wells Fargo Investment Institute, said a second term for either Biden or Trump could heighten focus on issues they have already emphasized in their first term, such as tax cuts for Trump and environmental spending for Biden.

“Neither one has really changed all that much with respect to their philosophy and what their goals are. If anything they might lean harder onto them,” he said.

For now, the market’s spirits are high. After a wild two-year ride, the S&P 500 stands at an all-time record on expectations that the Fed will cut interest rates later this year while the economy remains resilient. Bets on Fed easing have also brought down Treasury yields, which move inversely to prices, from last year’s 16-year highs.

FOCUS ON TAXES

Lower taxes could give a broad boost to equity markets if Trump wins and succeeds in making his 2017 cuts permanent – though fears of a revived trade battle with China might counterbalance some of those gains, analysts at TD Securities wrote in a recent report. Trump has proposed to increase tariffs by 10% across the board to bolster US manufacturing.

Tax cuts could also stir fears of growing budget deficits and weigh on Treasury prices by pushing up term premium – a measure of the compensation investors demand for holding long-term bonds, the firm wrote.

Rating agency Fitch last summer downgraded the US government’s top credit rating, citing factors including expected fiscal deterioration in coming years.

A Biden win might mean higher corporate taxes, a possible negative for stocks, according to TD’s analysts. The degree to which either candidate is able to push through his respective policies could well depend on which party gains control of the House and Senate, they added.

Shares of solar stocks and other renewable energy companies – many of which have been pressured by higher interest rates – stand to benefit from a re-election of Biden due to his expected support of clean energy initiatives, said King Lip, chief strategist at Baker Avenue Wealth Management.

“With rates coming down and continued high government spending on these projects … I think the clean energy industry can do quite well actually under a second Biden administration,” Lip said.

Analysts at Neuberger Berman, meanwhile, said a Republican sweep could trigger a “significant relief rally” for large-cap pharmaceutical companies that would be less likely to see drug price controls implemented as part of the Inflation Reduction Act.

“As a domestically focused sector, healthcare services could … be a shelter from the trade policies of a Trump administration,” wrote Joseph Amato, Neuberger’s chief investment officer, equities.

Some Trump-linked stocks have already seen sharp moves: shares of Digital World Acquisition DWAC.O, the blank check firm set to take his social media platform public, soared on Monday after Florida Governor Ron DeSantis ended his 2024 presidential bid, though they have since pared those gains.

In foreign exchange markets, Goldman Sachs strategists said a Trump presidency could boost the US dollar. Their analysis, which studied a period of dollar strength following Trump’s victory in the Iowa caucus on Jan. 15, “suggests that Trump’s trade and international agenda might ultimately be worth a further 5-10% of upside to the USD in the event of a Trump presidency,” they wrote in a Jan. 22 report.

Strategists warned, however, that markets may be slow to price in any possible outcomes this far from election day.

“The last few elections have really come down to the wire,” said Samana, of Wells Fargo. “I don’t see the market making big bets on either one unless it starts to look like it will be a runaway.”

(Reporting by David Randall and Lewis Krauskopf; Editing by Ira Iosebashvili and Andrea Ricci)

Gold stumbles on strong US data, as traders strap in for more

Jan 24 – Gold eased on Wednesday after data showed strong US business activity, even as a weakened dollar limited losses, while investors looked ahead to more economic indicators to assess when the Federal Reserve might first cut interest rates.

Spot gold was down 0.7% at USD 2,014.56 per ounce at 2:13 p.m. ET (1913 GMT), eyeing its worst session in a week. US gold futures settled 0.5% lower at USD 2,016.00.

“Gold prices are pretty insulated from a hawkish repricing in rates markets, because there are signs that investors are historically under-positioned in gold despite markets expecting an imminent start to the Fed’s cutting cycle,” said Daniel Ghali, commodity strategist at TD Securities.

US business activity picked up in January and inflation appeared to abate, an S&P Global survey showed.

A strong US economy and pushback from central bank officials is leading some investors to rethink their bets on how quickly the Fed will cut rates this year.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

According to the CME’s FedWatch Tool, markets expect the Fed to keep interest rates unchanged at its Jan. 30-31 policy meeting and have pushed back the timeframe of the first interest rate cut.

The dollar slipped 0.4% against its rivals, making greenback-priced bullion cheaper for overseas buyers.

“China is putting together a more comprehensive package to stem the pervasively pessimistic sentiment that has plagued their markets for months which is weighing on the broad US dollar,” Ghali added.

China’s central bank announced a deep cut to bank reserves that will inject about USD 140 billion of cash into the banking system.

Investors are now focusing on the fourth-quarter advance US GDP estimates on Thursday, and personal consumption expenditure data on Friday.

Spot silver rose 1.2% to USD 22.7 per ounce, platinum was up 0.23% to USD 902.18 and palladium rose 1.65% to USD 963.59.

(Reporting by Anushree Mukherjee and Deep Vakil in Bengaluru; Additional reporting by Daksh Grover; Editing by Mark Potter, Shweta Agarwal, and Krishna Chandra Eluri)

Oil edges up 1% on big US crude withdrawal, China stimulus

NEW YORK, Jan 24 – Oil prices edged up about 1% on Wednesday on a bigger-than-expected US crude storage withdrawal, a slump in US crude output, Chinese economic stimulus, geopolitical tensions, and a weaker dollar.

Brent crude futures rose 49 cents, or 0.6%, to settle at USD 80.04 a barrel, while US West Texas Intermediate crude (WTI) ended 72 cents, or 1.0%, at USD 75.09.

China’s central bank will cut the amount of cash that banks must hold as reserves from Feb. 5, a move expected to shore up a fragile economic recovery.

US crude stockpiles tumbled by 9.2 million barrels last week, the Energy Information Administration said, more than quadruple the 2.2 million-barrel draw analysts forecast in a Reuters poll.

“It’s a weather report all-around … Nobody was driving (last week). One big number is domestic production was down, and Bakken production took a big hit,” said Bob Yawger, director of energy futures at Mizuho, a bank.

US crude output fell from a record-tying 13.3 million barrels per day (bpd) two weeks ago to a five-month low of 12.3 bpd last week after oil wells froze during an Arctic freeze.

North Dakota officials have said it could take a month for oil output in the state, which includes the Bakken shale field and is the third biggest oil producing state, to recover after last week’s extreme weather cut production by more than half.

Geopolitical tensions remained in focus the day after a coalition of 24 nations led by the US and Britain conducted new strikes against Houthi fighters in Yemen who have been attacking global trade.

The US said Iran-backed Houthis have mounted 26 attacks since late November on commercial shipping in the Red Sea which was used by about 12% of global oil trade before the attacks.

The US also carried out strikes against Iran-linked militia in Iraq on Tuesday, after an attack on an Iraqi air base wounded US forces.

“Geopolitical risk and the threat of delays and disruption are causing some alarm but that’s not being particularly reflected in the price at this stage,” said Craig Erlam, senior market analyst UK & EMEA, at data and analytics firm OANDA.

Elsewhere, tank shells hit a UN training center sheltering tens of thousands of displaced people in the southern Gaza city of Khan Younis, killing at least nine people and wounding 75, as Israeli forces advanced there.

The US dollar, meanwhile, fell to a one-week low against a basket of other currencies. Analysts at energy advisory Ritterbusch and Associates said the weaker dollar was lending some “bullish momentum” to oil prices.

A weaker dollar makes crude cheaper for buyers using other currencies.

(Reporting by Scott DiSavino, Laila Kearney, Ahmad Ghaddar, Noah Browning, Colleen Howe, and Muyu Xu; Editing by Marguerita Choy and David Gregorio)

Testing China, Hong Kong stocks’ bounce back ability

Jan 24 – Investor sentiment towards China has picked up following a report that Beijing is considering a hefty package to support its ailing markets, and Wednesday’s trading activity will give some insight into whether it will be fleeting or something more lasting.

Elsewhere in the Asia & Pacific region on Wednesday New Zealand inflation, purchasing managers index reports from Australia and Japan, and a monetary policy decision in Malaysia all have market-moving potential.

The broader mood music, however, will probably be set by the S&P 500’s third consecutive record closing high, and by how Chinese and Hong Kong markets trade.

The performance of Chinese stocks on Tuesday was not particularly strong – Hong Kong stocks rallied much harder – but any rebound has to start somewhere.

Authorities and China bulls will be hoping this has legs. And it might if policymakers can mobilize about 2 trillion yuan (USD 278 billion), mainly from offshore accounts of state-owned enterprises, as part of a stabilization fund to buy shares onshore through the Hong Kong exchange link.

By some measures, these markets are attractive. Valuations are cheap, indexes are the lowest in years, and if authorities can put a floor in, then a fair bit of the capital that has fled China and Honk Kong lately could be tempted back.

Perhaps.

The CSI 300 index’s rise of 0.4% and the Shanghai Composite’s rise of 0.5% on Tuesday were not big by most measures. But they were the biggest rise in almost a month, and enough to lift the indexes up from five- and four-year troughs, respectively.

In Hong Kong, the benchmark Hang Seng and Hang Seng tech index jumped 2.7% and 3.7%, respectively, for their best days in two months, but they too are coming from low bases.

The Hang Seng is flirting with the levels it was at when Hong Kong returned to China from Britain in 1997. Before Tuesday’s spike, Hong Kong tech stocks were down 20% this month.

Japan’s equity bull run took a breather on Tuesday after the Bank of Japan stood pat at its policy meeting but appeared to err on the hawkish side, while the yen eventually gave back its initial gains and drifted down to 148.50 per dollar.

There was something for everyone, however, in Governor Kazuo Ueda’s comments, as he noted that inflation seems to be heading back toward the bank’s 2% target in a sustainable manner. If this narrative prevails, expect the Nikkei to resume its upswing and the yen and bond yields to remain under pressure.

Meanwhile, Bank Negara Malaysia is widely expected to leave its overnight policy rate unchanged at 3.00% on Wednesday and hold it there until at least the end of next year.

Here are key developments that could provide more direction to markets on Wednesday:

– Australia PMIs (January)

– Japan PMIs (January)

– Malaysia interest rate decision

(By Jamie McGeever; Editing by Bill Berkrot)

S&P 500 notches third straight record high close

Jan 23 – The S&P 500 climbed to a record high close on Tuesday as investors digested a mixed bag of early quarterly results and awaited a slew of additional reports from Tesla and other companies later this week.

It was the third straight all-time high for the benchmark stock index, and many investors view upcoming quarterly reports from the heavily weighted “Magnificent 7” group of megacap companies as key to whether Wall Street’s recent rally continues or loses steam.

“It’s a crescendo of reports tomorrow and Thursday, and then next week will be even busier,” said Art Hogan, chief market strategist at B. Riley Wealth. “We’ve got a lot of things to contemplate over the course of this week and next that will likely end up being a market positive.”

In extended trade, Netflix rallied 3.2% after the video streaming service blew past Wall Street subscriber estimates in the fourth quarter, driven by a strong slate of shows.

The S&P 500 climbed 0.29% to end the session at 4,864.59 points.

The Nasdaq gained 0.43% to 15,425.94 points, while Dow Jones Industrial Average declined 0.25% to 37,905.45 points.

Verizon Communications rallied 6.7% after forecasting a strong annual profit and posting its highest quarterly subscriber additions in nearly two years, while Procter & Gamble gained 4.2% after it topped second-quarter profit expectations.

3M tumbled 11% after forecasting dour annual earnings, while Johnson & Johnson dipped 1.6% after reporting quarterly results just above expectations.

D.R. Horton dropped over 9% after the homebuilder missed estimates for first-quarter profit.

Tesla climbed 0.2% ahead of its report late on Wednesday.

Analysts on average see S&P 500 fourth-quarter earnings up 4.6% year over year, compared to 7.5% growth in the third quarter, according to LSEG data.

Stock market valuations appear rich. The S&P 500 is trading at about 20 times forward 12-month earnings estimates, well above its long-term average of 16 times, according to LSEG.

“Earnings for all equity classes peaked and will move lower as the economy weakens and revenue growth stalls,” Wells Fargo senior global market strategist Sameer Samana said in a note.

Wall Street’s recent gains have been fueled by expectations of lower interest rates and optimism around artificial intelligence, which has helped lift the Philadelphia chip index over 5% so far in 2024, adding to a 65% surge last year.

The personal consumption expenditure (PCE) index – the Federal Reserve’s preferred inflation gauge, as well as the S&P Global PMI readings and an advance fourth-quarter GDP print this week will be key in assessing the central bank’s next interest rate decision when it meets on Jan. 31.

The Fed will wait until the second quarter before cutting rates, according to a Reuters poll, with June now seen more likely than May.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.2-to-one ratio.

The S&P 500 posted 34 new highs and one new low; the Nasdaq recorded 102 new highs and 90 new lows.

Volume on US exchanges was relatively light, with 10.9 billion shares traded, compared to an average of 11.4 billion shares over the previous 20 sessions.

(Reporting by Ankika Biswas, Johann M Cherian, and Shubham Batra in Bangalore and by Noel Randewich in Oakland. Calif.; Editing by Pooja Desai, Maju Samuel, and Aurora Ellis)

Yields rise as investors await growth, inflation data

NEW YORK, Jan 23 – Treasury yields rose on Tuesday as investors await economic growth and inflation data later in the week that could influence when the Federal Reserve decides to cut interest rates.

The Treasury sold USD 60 billion in two-year notes at a high yield of 4.365%, in an auction that barely budged prices despite concerns about rising government debt issuance, which has led some investors to demand a higher risk premium.

The yield on two-year notes, which reflects interest rate expectations, rose 0.4 basis points to
4.381% after trading as high as 4.419%.

The Treasury has increased sales of two-year notes at auction from USD 57 billion in December and USD 54 billion in November. Another USD 61 billion of five-year notes will be sold on Wednesday and USD 41 billion of seven-year notes on Thursday.

The likelihood policymakers cut rates in March has fallen to less than 50% from about a 75% probability a month ago after Fed officials last week pushed back on market expectations of up to 150 basis points of rate cuts this year.

The recent bond rally might not have been priced for perfection, but it was anticipating a lot of good news and set up for disappointment, said Kevin Flanagan, head of fixed income strategy at WisdomTree in New York.

“Every week the Treasury market has been getting a little punch here, a little punch there, you know, trying to take some of the air out of that balloon,” he said.

“You had the pushback from the Fed last week. That played a big role in just resetting Treasury yields here in 2024.”

Investors await the first estimate of gross domestic product for the fourth quarter on Thursday and the Personal Consumption Expenditures index (PCE) on inflation on Friday.

The Treasury will issue a general financing estimate on Monday and details on any auction size increases on Jan. 31.

The Treasury is likely to increase auction sizes across most maturities, with the exception of 20-year bonds, said Vail Hartman, US rates strategist at BMO Capital Markets.

The Treasury’s refinancing estimate has gained greater focus since the government last July sparked a bond sell-off after announcing higher-than-expected borrowing needs for the third quarter.

“Who’s going to buy all this Treasury debt?” said Tom Simons, money market economist at Jefferies in New York. “It’s fair to expect that we’re probably going to get some pushback on the supply side here through the end of the month.”

The yield on the benchmark 10-year note rose 4.6 basis points to 4.140%.

The curve that measures the difference between yields on two- and 10-year Treasuries flattened further at -24.3 basis points. When the shorter-dated security’s yield is higher than the long end, or inverted, it is seen as a recession harbinger.

The yield on the 30-year Treasury bond was up 5.9 basis points at 4.375%.

The breakeven rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.266%.

The 10-year TIPS breakeven rate was last at 2.291%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

(Reporting by Herbert Lash; additional reporting by Karen Brettell in New York; editing by Jonathan Oatis and Richard Chang)

Gold edges up as traders eye cues on US rate cuts

Jan 23 – Gold prices inched higher on Tuesday, as investors awaited a slew of US economic data this week for more cues to the Federal Reserve’s timeline for interest rate cuts.

Spot gold was up 0.2% to USD 2,025.09 per ounce by 2:00 p.m. ET (1900 GMT).

Gold futures settled 0.2% higher at USD 2025.8.

“The gold market is just above the USD 2,000 mark and it seems to be a neutral market. Every time we start to break higher, we come back down,” said Daniel Pavilonis, senior market strategist at RJO Futures.

“There is a lot of uncertainty on what is going to happen here economically in the United States.”

Focus this week will be on the US flash PMI report on Wednesday, fourth-quarter advance GDP estimates due on Thursday, and personal consumption expenditures data on Friday.

Fed officials last week said the US central bank needs more inflation data in hand before any rate cut judgment could be made and that the baseline for cuts to start was in the third quarter.

Markets are pricing in the US central bank to hold rates unchanged at the end of the policy meeting on Jan. 30-31 and have pared back the timing of the first interest rate cut, according to CME’s FedWatch Tool.

Recent rebounds (in gold) appear to be getting shallower, which raises the prospect of further weakness if central banks continue to push back on market expectations of rate cuts, Michael Hewson, chief market analyst at CMC Markets, wrote in a note.

Lower interest rates decrease the opportunity cost of holding bullion.

Meanwhile, the European Central Bank meets on Thursday and is expected to hold monetary policy steady.

On the physical front, India increased the import duty on gold and silver findings, used in making jewellery.

Spot silver rose 1.2% to USD 22.35 per ounce, platinum climbed 0.7% to USD 898.41 and palladium gained 0.9% to USD 944.42.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Shweta Agarwal, Tasim Zahid, and Krishna Chandra Eluri)

Oil prices settle down slightly on more supply in US and abroad

NEW YORK, Jan 23 – Oil prices settled lower on Tuesday as traders focused on rebounding crude output in parts of the US, along with rising supply in Libya and Norway, rather than risks to supply posed by conflict in Europe and the Middle East.

Brent crude settled at USD 79.55 a barrel, losing 51 cents, or 0.6%. US West Texas Intermediate crude settled at USD 74.37 a barrel, shedding 39 cents, or 0.5%.

In North Dakota, the third-largest oil-producing US state, some oil output came back online after shutting because of extreme cold, the state’s pipeline authority said. However, output was still down as much as 300,000 bpd.

Persistent weakness in US gasoline demand has also hit oil prices, said John Kilduff, partner at Again Capital LLC.

While US crude stocks dropped by 6.67 million barrels last week, gasoline inventories jumped by 7.2 million barrels, according to market sources citing American Petroleum Institute figures. Official US government data is due on Wednesday.

Rising production elsewhere further pressured prices.

Norway’s crude production rose to 1.85 million barrels per day (bpd) in December, up from 1.81 million bpd the previous month and beating analysts’ forecasts of 1.81 million bpd, according to the Norwegian Offshore Directorate (NOD).

In Libya, production at the 300,000 bpd Sharara oilfield restarted on Jan. 21 after the end of protests that had halted output since early this month.

Geopolitical uncertainty limited losses.

“You’ve got the geopolitical pressures that aren’t enough to really rally the oil market, but they’re enough to keep the market from bottoming out of the range,” said Bob Yawger, director of energy futures at Mizuho Bank.

Crude prices rose by around 2% on Monday after a Ukrainian drone strike on Novatek’s Ust-Luga Baltic fuel export terminal near Russia’s second city St Petersburg raised supply concerns.

In the Middle East, tensions rose after US and British forces carried out a second joint round of strikes on Houthi positions in Yemen.

(Additional reporting by Robert Harvey and Noah Browning in London, and Emily Chow and Trixie Yapp in Singapore; Editing by Kevin Liffey, David Gregorio, Christina Fincher, and Deepa Babington)

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