Oil prices advanced on Wednesday, supported by increased U.S. refinery activity and heightened tensions in the Middle East. Gold rallied as Treasury yields and the dollar slipped following the U.S. Treasury's announcement of expanded long-dated debt buybacks. Copper prices also moved higher on the London Metal Exchange.
Crude Oil: Middle East Tensions Escalate, Prices Hit Three-Week High
Crude oil reached its highest level in over three weeks on Wednesday, driven by U.S. refiners ramping up production and escalating regional tensions stemming from a dispute between the United Arab Emirates and Iran.
Brent crude futures gained less than 1%, settling below $92 per barrel. The UAE accused Iran of launching ballistic missiles at its territory and announced it would sever all economic ties with Tehran. This escalation followed U.S. President Donald Trump's insistence that no negotiations are currently underway with Iran to end the conflict.
"The escalation between the UAE and Iran, combined with a growing market inclination toward a 'longer-lasting closure' scenario, is jointly supporting crude and refined product prices," said Arne Lohmann Rasmussen, chief analyst at Global Risk Management.
Meanwhile, the latest U.S. government data showed refinery crude processing volumes reached their highest level since September 2019. This may explain why oil prices still edged higher despite a 4.4 million barrel build in domestic crude inventories last week.
Data from the U.S. Energy Information Administration also revealed that distillate inventories fell by 1.5 million barrels last week, hitting a more than one-month low and providing additional support to prices.
October Brent crude settled up 0.7% at $91.62 per barrel.
September WTI crude, which expires on Thursday, rose 1.1% to $85.83 per barrel.
The more actively traded October contract settled at $84.39 per barrel.
Precious Metals: Gold Posts Sharp Gains
Gold prices surged on Wednesday, powered by falling Treasury yields after the U.S. Treasury unexpectedly announced an increase in long-dated debt buybacks.
The Treasury said it would step up purchases of longer-dated securities, signaling a desire to reduce borrowing costs after yields climbed to multi-decade highs. The 30-year Treasury bond rallied, pushing yields lower, while the dollar weakened, driving gold prices sharply higher.
Ole Hansen, head of commodity strategy at Saxo Bank, noted that although the increased buyback scale is minimal compared to the roughly $40 trillion in total U.S. federal debt, the move signals stronger official support for the Treasury market and ultimately implies easier financial conditions, a combination that is favorable for gold.
Hansen added that gold traders are likely to pay increasing attention to further measures aimed at supporting the U.S. Treasury market. The more such measures are seen as distorting bond pricing, the greater the likelihood of dollar weakness, which in turn would underpin gold prices.
As a sign of improving sentiment, gold ETFs tracked by Bloomberg added more than 257,000 ounces on Tuesday, marking the largest single-day inflow since April.
However, the diminished prospects for a U.S.-Iran peace deal could keep energy prices elevated and limit further gains in gold.
At 4 p.m. in New York, spot gold rose 4.1% to $4,510.75 per ounce; spot silver gained 4.7% to $66.3556 per ounce; platinum and palladium also moved higher.
Base Metals: Copper Advances as LME Inventories Rebound
The historic tightness in the copper market eased somewhat as large volumes of deliverable copper flowed into London Metal Exchange warehouses, although signs of tightness in the spot market persist.
According to data released on Wednesday, registered warrant inventories across the LME's global warehouse network increased by more than 35,000 tonnes, the largest gain since 2024. This followed an increase of over 20,000 tonnes in the previous trading session. Prior to the recent rebound, inventories had plunged roughly 75% from their mid-April peak.
The replenishment of inventories has partially alleviated the tightness that had been created by large volumes of copper being shipped to the United States.
The closely watched spot-to-three-month copper spread narrowed to $314.81 per tonne on Wednesday, down from a peak cash premium of $545 per tonne seen on Monday.
However, supply tightness has not disappeared. Alastair Munro, metals strategist at Marex, noted that the key tom-next spread remained in a substantial cash premium on Wednesday.
Benchmark three-month copper on the LME rose 0.5% to settle at $14,049.50 per tonne, supported by falling bond yields and a weaker dollar following the Treasury's announcement of increased long-dated debt buybacks.
Closing Prices
LME copper rose 0.5% to $14,049.50 per tonne;
LME aluminium gained 0.2% to $3,227.50 per tonne;
LME zinc added 0.4% to $3,708.50 per tonne;
LME nickel climbed 2.2% to $17,113 per tonne;
LME tin advanced 1.3% to $55,550 per tonne;
LME lead was little changed at $1,887.50 per tonne.
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