Live: Oil prices on the rise as energy supply concerns continue
Quick Look
- Oil prices climbed overnight due to attacks on Saudi Arabia, overshadowing hopes for supply improvements.
- The US dollar rose to near an 18-month high as expectations for higher Federal Reserve interest rates to combat inflation grew, driven by strong US energy costs and inflation data.
- Investors awaited September inflation figures and the start of third-quarter earnings, with major US banks reporting tomorrow.
AI-generated summary
Why It Matters
Oil prices have been volatile due to Middle East tensions, while the US dollar has strengthened on expectations that persistent inflation will force the Federal Reserve to maintain higher interest rates for longer. US Treasury yields reached 24-year highs this month as inflation concerns persist.
Oil prices climbed overnight as attacks on Saudi Arabia overshadowed hopes for supply improvements, and expectations for higher US interest rates to fight inflation drove the dollar higher on a narrowly mixed day for global stocks.
The action came after US President Donald Trump hailed fresh Russian diesel exports and a Russia-Ukraine energy ceasefire.
The greenback's rise in recent months has been driven in large part by expectations that high prices for energy and other goods will force the Federal Reserve to raise interest rates at a time when US growth is stronger than in other rich economies. This could expand the rate differentials that drive currency movements.
While the US bond market was closed for the Columbus Day holiday, investors were cautiously waiting for September inflation data and the third-quarter earnings season, which begins tomorrow with earnings from major US banks.
"There's a lot to be wary of," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.
"You're walking down a train line and you don't know, because it's dark, if a train is coming and so, you know, you're just being real careful right today."
Besides the wait for earnings and economic data, Pavlik noted that stocks were also "being kept in check because of higher oil" and a lack of direction from the bond market, which tends to influence stocks and other assets.
US Treasury yields hit 24-year highs this month as high energy costs fueled concerns that inflation could stay elevated, keeping policymakers hawkish and pressuring equity valuations.
In currencies, the US dollar held near an 18-month high, supported by safe-haven demand as an escalating Middle East conflict kept investors cautious ahead of the inflation data.
Markets imply only a 19% chance of a rate increase from the Federal Reserve this month, rising to a roughly 71% chance for a hike of 25 basis points in December, according to CME Group's FedWatch tool.
Investors are also betting on hikes in the EU, Japan and Britain before the end of the year.
What to Watch
AI outlook — possibilities, not facts
The Federal Reserve will increase interest rates by 25 basis points in December
Likely · Within months
Oil prices will remain elevated in the near term if Middle East tensions persist
Possible · Within weeks
Open Questions
- Will the attacks on Saudi Arabia lead to further escalation in the region?
- How will third-quarter earnings from major US banks influence market expectations for interest rates?
- What is the likelihood of a broader Middle East conflict affecting global oil supplies?