Crude oil advanced as multiple key market indicators pointed to tight supply, outweighing signs of progress in diplomatic efforts to reopen the Strait of Hormuz.
Gold declined as the rebound in oil prices reinforced expectations that the Federal Reserve will need to keep raising interest rates to curb inflation.
Zinc prices on the London Metal Exchange (LME) rose on Thursday after Trafigura Group's Nyrstar announced it may shut down one of its European plants.
Crude Oil: Brent Climbs as Tight Supply Tempers Optimism Over Hormuz Deal
Crude oil rose as multiple key market indicators signaled tight supply, overshadowing signs of progress in diplomatic efforts to reopen the Strait of Hormuz.
Brent crude futures settled near $107 a barrel, after rising as much as 5% during the session. Prices initially climbed on hawkish remarks from Iran, then pared some gains after reports emerged that U.S. and Iranian negotiators were exploring a phased agreement. Under such a deal, Iran would reopen the critical energy transit corridor, while the U.S. would lift its economic blockade on Iranian ports.
Although the news fueled optimism about a diplomatic resolution to the conflict, doubts persist. The two sides had previously appeared close to a breakthrough, only for talks to ultimately collapse. As a result, many traders are reluctant to adjust positions until they see a clear increase in crude supply reaching the market.
"We've seen this movie many times before," said Pavel Molchanov, an analyst at Raymond James, referring to previous instances when breakthrough signs failed to materialize. "Seeing is believing. We need to see something substantive."
Meanwhile, indicators reflecting spot market supply conditions showed extreme tightness. Oil traders on Thursday paid a record premium to secure immediately deliverable crude from the largest U.S. storage hub. At the same time, the discount of U.S. WTI to Brent widened to its largest since May, signaling that overseas buyers are grappling with the prospect of scarce supply.
Earlier, oil prices rose after a senior Iranian military official said Iran could expand the war to the Indian Ocean if the U.S. or Israel resumed strikes. Meanwhile, Saudi Arabia was once again attacked by Houthi forces.
Traders are also closely watching Saudi Arabia's exports. The Iran-backed Houthis launched another attack, and Saudi Arabia said it intercepted missiles fired toward the Red Sea port of Yanbu. As European energy prices surged, French President Emmanuel Macron said France would deploy troops to defend Yanbu.
Nevertheless, some crude continued to flow out. Saudi Arabia's September crude exports rose to the highest level since the Iran war broke out.
Meanwhile, fuel markets were hit even harder, adding to the burden on consumers and intensifying central banks' concerns about price pressures. Reports said U.S. Energy Secretary Chris Wright has told oil industry executives to prepare for possible diesel export restrictions, though no final decision has been made. Trump's core advisers are divided on the matter, while oil company executives have warned against such a move.
WTI futures settled up 2.7% at $94.61 a barrel. Brent November futures settled up 3.4% at $106.60 a barrel.
Gold Falls as Traders Eye Oil Rebound and Fed Rate Path
Gold declined as the oil price rebound reinforced market expectations that the Federal Reserve will need to continue raising rates to curb inflation. Spot gold fell as low as $4,244.57 an ounce, after dropping 1.7% the previous session.
Oil prices rose as traders weighed Middle East tensions, with the U.S. and Iran still far apart on key issues related to restoring energy shipments through the Strait of Hormuz. On Thursday, the U.S. Treasury market selloff deepened. Another sharp rally in oil prices triggered inflation concerns, pushing long-term U.S. Treasury yields to their highest in more than 20 years.
As of 3:39 p.m. New York time, spot gold was down 0.3% at $4,274.27 an ounce. Silver fell 1% to $63.76 an ounce, following a 4% drop the previous session. Platinum and palladium edged higher. The Bloomberg Dollar Index rose 0.3%.
Zinc Rebounds as Trafigura Evaluates Smelter Closure
Zinc prices on the London Metal Exchange (LME) rose on Thursday after Trafigura Group's Nyrstar announced it may shut down one of its European plants.
Nyrstar said in a statement that it has launched a strategic review of its Budel zinc smelter in the Netherlands. The plant will continue operating during the review, which is expected to be completed by the end of 2026.
LME zinc rose 1.4% to $3,955 a ton. LME nickel gained 0.1% to $16,501 a ton. LME tin added 0.2% to $54,010 a ton. LME lead advanced 0.7% to $1,934 a ton. LME copper was little changed at $14,621 a ton.
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