Crude oil prices edged higher on Wednesday as uncertainty over a deal to reopen the Strait of Hormuz kept traders on edge, while copper prices held steady amid diminished risk appetite. Gold slipped from its two-month peak as the market shifted focus to upcoming U.S. inflation data, which could influence the Federal Reserve's interest rate stance.
Oil prices extended their winning streak to a fourth consecutive session, with West Texas Intermediate climbing 1.3% to close near $83 a barrel. The market remains highly sensitive to any signals regarding negotiations between the U.S. and Iran to reopen the key energy shipping route. Despite some official statements suggesting progress, traders remain skeptical that an immediate agreement to restore navigation through the Strait of Hormuz is imminent. President Donald Trump has presented a comprehensive new set of demands to Iran, casting a shadow over the prospect of a deal and fueling a recent surge in oil prices.
Pakistan's defense minister stated on Tuesday that the U.S. and Iran were "close to reaching some kind of arrangement" regarding the Strait of Hormuz. Separately, Al Jazeera reported, citing Qatar's foreign ministry spokesperson, that negotiations between Oman and Iran are progressing to an advanced stage. The restoration of shipping through the Strait of Hormuz is critical to the global oil market's supply-demand balance. The U.S. currently expects that the disruption caused by the conflict, which has removed roughly 600,000 barrels per day from the market, will persist until the end of next year.
"The more optimistic signals from Pakistan suggest that there is at least some form of communication between Iran and the U.S., prompting some profit-taking in the market," said Arne Lohmann Rasmussen, chief analyst at Global Risk Management. However, ongoing conflicts in the Middle East keep traders vigilant. The U.S. military reported that a U.S. Navy helicopter fired two Hellfire missiles at a Panama-flagged cargo ship attempting to pass through the Gulf of Oman. In Russia, a fire broke out at a Rosneft refinery in the Khabarovsk region, but the company stated that operations were not interrupted.
September-delivery WTI rose 1.3% to settle at $83.20 per barrel. October-delivery Brent crude climbed 1.4% to $88.91 per barrel.
Base metal copper was largely unchanged, holding above $14,000 per tonne, as uncertainty over a near-term deal to reopen the Strait of Hormuz dampened risk appetite. Adding to supply concerns, Indonesia's copper exports are facing delays after a boiler leak at the smelter supporting the massive Grasberg mine shut down over the weekend. At the close, LME copper was flat at $14,156.5 per tonne. LME aluminum rose 1.4% to $3,364 per tonne. LME nickel fell 0.6% to $16,830 per tonne. LME zinc slipped 0.2% to $3,728.5 per tonne. LME tin added 0.3% to $55,912 per tonne. LME lead edged up 0.2% to $1,907 per tonne.
Gold prices retreated from their two-month high, as traders balanced the outlook for a U.S.-Iran deal on the Strait of Hormuz with anticipation of upcoming U.S. inflation data, which will help determine if the Federal Reserve is leaning toward an interest rate hike. Bullion fell as much as 0.8%, marking its largest intraday decline in a month. Iran reiterated that it would keep the Strait of Hormuz closed until its demands are met, a stance that boosted oil prices. The rebound in energy prices complicates the Fed's rate path, prompting traders to avoid major bets ahead of Wednesday's U.S. inflation data. As of 5:00 p.m. Eastern time, spot gold was down 0.5% at $4,370.11 per ounce. Spot silver fell 1.6% to $64.6815 per ounce.
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