Oil prices rose on Wednesday, as markets balanced fears of supply disruption due to a storm heading towards oil and gas production areas in the Gulf of Mexico, attacks in Saudi Arabia, and increased crude flows from the Middle East.
Brent crude futures rose 93 cents, or 0.92 percent, to $101.51 per barrel by 00:22 GMT, while West Texas Intermediate crude rose 82 cents, or 0.92 percent, to $90.25.
The US Weather Service said on Tuesday that a storm forming in the Gulf of Mexico will turn into the first Atlantic hurricane in 2026 within two days, and is likely to affect oil and gas production facilities in the region. Marine areas in the storm's path produce about 15 percent of US crude oil production and 5 percent of natural gas production.
Tim Waterer, chief analyst at KCM Trade, said that the storm represents “unwanted complexity” for the crude market, in light of the potential disruption of production and refining operations, at a time when the market is already facing several pressures on the supply side.
The storm may also affect six refineries, while refineries located in the Gulf Coast states represent about half of the US refining capacity of 18.2 million barrels per day.
In the United States, preliminary data from the American Petroleum Institute, according to market sources, showed a decline in crude and gasoline stocks last week, while distillate stocks rose slightly. Crude inventories fell by 2.09 million barrels in the week ending October 2.
On the other hand, supplies from the Middle East are increasing, as Saudi Energy Minister Prince Abdulaziz bin Salman said on Tuesday that flows of the “East-West” pipeline had risen to 5.8 million barrels per day.
The head of Vitol said that about 12 million barrels per day of crude and two million barrels per day of refined products were leaving the Middle East on board tankers during the past seven to ten days.
But geopolitical risks returned to the forefront with the targeting of Jizan and Najran airports in Saudi Arabia in two attacks on Monday evening, according to the Saudi Civil Aviation Authority.
Mukesh Sahdev, senior oil analyst at XAnalysts in Sydney, said the attacks and refinery disruptions “are likely to keep refining margins high,” adding that the scarcity of products will spill over into the crude market. He expected prices to remain near the level of $100 per barrel “without any tangible calm appearing.”
Relations between the United States and Iran remain tense, with US President Donald Trump saying on Tuesday that no one knows who is running Iran after the eight-month war between the United States and Israel on one side and Iran on the other.
The Iranian Foreign Ministry spokesman said on Sunday that Washington knows well its counterpart in Iran and how its decision-making system works.
Gold prices fell on Wednesday, as investors awaited the minutes of the last meeting of the Federal Reserve, searching for indications that monetary policy makers are heading to continue raising interest rates.
Gold in spot transactions fell 0.3 percent to $4,150.23 an ounce by 01:45 GMT, while US gold futures fell 0.2 percent to $4,177.60.
The minutes of the last meeting of the Federal Open Market Committee are scheduled to be issued later on Wednesday, with investors awaiting any signals regarding the extent of support within the Federal Reserve for further raising interest rates.
Frank Wallbaum, market analyst at Naga.com, said that gold may remain relatively stable with a slight tendency to decline, noting that the minutes of the meeting will clarify the direction of monetary policy and the extent of policymakers’ support for additional interest increases, which may reshape the markets’ expectations for future movements.
He added that movements in long-term US Treasury bond yields, the dollar, and oil prices, resulting from any developments in the Middle East, may increase the impact of these signals on the direction of gold.
Recent statements by Federal Reserve officials showed the central bank’s commitment to continuing to combat inflation. Federal Reserve President Mary Daly in San Francisco said that the need to raise interest rates again depends largely on whether the factors driving inflation to rise will decline or continue.
Kansas City Fed Chairman Jeff Schmid also said that interest rates still need to rise further to reduce inflation.
Recent weak economic data has led to a decline in expectations for a rate hike in October, but traders are still pricing in an 85 percent chance of raising it by December.
Higher interest rates usually increase the attractiveness of yield-generating assets compared to gold, which does not generate a return.
In an indication of the continued bullish expectations for gold in the medium term, participants at the annual conference of the Bullion Market Association in London, held in Sorrento, Italy, expected the price of gold to reach $5,013 per ounce during the next 12 months.
In separate developments, US Vice President J.D. Vance said, in an exclusive interview with Reuters, that Iran must make a “significant” reduction in its ability to enrich uranium to meet American demands and end the war that has been ongoing for seven months.
Silver fell in spot transactions about 1 percent to $61.12 per ounce, while platinum rose 0.2 percent to $1,704.25, and palladium fell 0.3 percent to $1,168.20.
