Oil prices climbed on news that oil producer could cooperate to cut oil output.

The Iraqi oil minister, Adel Abdul Mahdi, said that Saudi Arabia and Russia are more flexible in considering the oil output cut.

Kuwait's Organization of the Petroleum Exporting Countries (OPEC) Governor Nawal al-Fuzaia said that OPEC is ready to cooperate to stabilise the oil market.

"Non-OPEC producers keep on making statements that they are willing to cooperate but the reality is different," she noted.

The World Bank released its annual Commodity Markets Outlook on Tuesday. The bank lowered its crude oil prices forecasts to $37 a barrel for 2016, down from its previous estimate of $51 a barrel. According to the World Bank, the reason for the downgrade is higher supply and weak demand.

Market participants are awaiting the release of U.S. crude oil inventories data. The American Petroleum Institute (API) is scheduled to release its U.S. oil inventories data later in the day, and U.S. oil inventories data from the U.S. Energy Information Administration is expected on Wednesday.

WTI crude oil for March delivery rose to $31.41 a barrel on the New York Mercantile Exchange.

Brent crude oil for March increased to $31.72 a barrel on ICE Futures Europe.

Gold price rise on a weaker U.S. dollar. Market participants are awaiting the release of the Fed's interest rate decision on Wednesday. Analysts expects the Fed to keep its interest rate unchanged after the interest rate hike in December.

Concerns over the slowdown in the global economy also supported gold.

February futures for gold on the COMEX today increased to 1117.10 dollars per ounce.

The World Bank released its annual Commodity Markets Outlook on Tuesday. The bank lowered its crude oil prices forecasts to $37 a barrel for 2016, down from its previous estimate of $51 a barrel. According to the World Bank, the reason for the downgrade is higher supply and weak demand.

Markit Economics released its preliminary services purchasing managers' index (PMI) for the U.S. on Tuesday. The U.S. preliminary services purchasing managers' index (PMI) dropped to 53.7 in January from 54.3 in December. Analysts had expected the index to fell to 54.0.

A reading above 50 indicates expansion in economic activity.

The drop was driven by a weaker output growth.

"The survey data paint an inauspicious start to the year for the US economy. A struggling manufacturing economy is being accompanied by a services sector where growth showed further signs of losing momentum in January even before the bad weather hit," Markit Chief Economist Chris Williamson said.

Kuwait's Organization of the Petroleum Exporting Countries (OPEC) Governor Nawal al-Fuzaia said that OPEC is ready to cooperate to stabilise the oil market.

"Non-OPEC producers keep on making statements that they are willing to cooperate but the reality is different," she noted.

The People's Bank of China (PBoC) on Tuesday injected 440 billion yuan ($67 billion) into market to boost liquidity via seven-day reverse bond repurchase agreements and via 28-day reverse repos.

The central bank usually injects extra money before the Lunar New Year holiday.

HSBC lowered its oil forecasts. The bank expects the Brent crude to be $45 a barrel in 216, down from its previous estimate of $60 a barrel. HSBC noted that the reasons for the cut are higher exports from Iran, higher U.S. crude inventories, market turmoil in China, a stronger U.S. dollar and a rise in speculative pressure on the futures market.

"It will probably take until H2 2016 or even 2017 before it moves back fully into balance," HSBC analysts Gordon Gray, Christoffer Gundersen, Kim Fustier and Thomas Hillboldt said in a research note.

West Texas Intermediate futures for March delivery fell to $29.48 (-2.83%), while Brent crude plunged to $29.58 (-3.02%) amid oversupply concerns. Iraq oil minister said his country planed to increase output by about 200-300,000 barrels per day to 4 million bpd. Meanwhile the chairman of Saudi Arabian Oil Co. said the Kingdom of Saudi Arabia would be able to handle low oil prices for a long time and that it does not intend to cut investment for oil and gas projects. Market participants are also bracing for additional supplies from Iran.

Gold rose to $1,113.40 (+0.73%) as equities declined boosting demand for safe-haven assets. Economists surveyed by Reuters now expect the U.S. Federal Reserve to raise interest rates three times this year rather than four. The central bank of the U.S. needs to consider struggling global economy. Higher interest rates are unfavorable for the non-interest-paying precious metal, that's why a decision to postpone a rate hike would be welcomed by gold investors.

The Federal Reserve's Federal Open Market Committee starts its two-day policy meeting today, however any changes to the monetary policy and interest rates are unlikely.

(raw materials / closing price /% change)

Oil 29.80 -1.78%

Gold 1,108.10 +0.25%