Canadian bonds gain following weak crude oil prices, Poloz’s speech in focus

The Canadian government bonds gained Tuesday as crude oil prices declined ahead of American Petroleum Institute (API) weekly crude stocks data and on Venezuelan remarks that the crude oil market remained oversupplied.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell nearly 3 basis points to 1.166 percent, the yield on long-term 30-year note also dipped 2-1/2 basis points to 1.799 percent and the yield on short-term 2-year bond slid 1 basis point to 0.576 percent by 13:00 GMT.

The Canadian bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Bank of Canada's target. According to Reuters, Crude oil prices reacted to comments made by Venezuela's Oil Minister Eulogio Del Pino on Monday that global oil supply of 94 million barrels per day (bpd) needs to fall by about a tenth if it is to match consumption.

Members of the Organization of the Petroleum Exporting Countries (OPEC) and other oil producers are set to hold an informal gathering in Algiers next week, which the oil market hopes could lead to an agreement to freeze production levels, Reuters reported. Meanwhile, the International benchmark Brent futures fell 1.30 percent to $45.35 and West Texas Intermediate (WTI) dipped 1.20 percent to $42.78 by 13:00 GMT.

Moreover, investors will remain keen to focus on the upcoming Bank of Canada Governor Stephen Poloz speech later today at 16:45 GMT. Lastly, Canadian stocks may struggle to continue its winning track Tuesday morning amid sluggish commodities.

The S&P/TSX Composite Index rose 0.31 percent at the close of the trading session to 14,496.23 on Monday.