Crude oil prices continued to decline as diplomatic activity in the Middle East intensified, copper advanced amid signs of mounting near-term supply pressure, and gold rebounded as bargain hunters returned ahead of the Federal Reserve's policy decision.
Crude Oil: Prices Extend Decline as Middle East Diplomacy Heats Up, Market Awaits Israeli Election Outcome
Brent crude settled below $114 a barrel, while WTI settled below $100, with U.S. gasoline and diesel futures falling roughly 3%. The Israeli election result could shape the trajectory of the Iran conflict. Israeli Prime Minister Netanyahu has advocated toppling the Tehran regime, while opposition leader Gadi Eisenkot has said Iran's nuclear program must be stopped but that regime change is "not an achievable objective." Robert Yawger, head of energy futures at Mizuho Securities USA, said that if Netanyahu loses and Eisenkot is unwilling to continue the war against Iran, it would be more difficult for the Trump administration to press ahead with action against Iran on its own. He also described the election as, in part, a "preview" of the U.S. midterm elections. Middle East diplomatic activity has picked up again, with Tehran since Sunday hosting a delegation from Qatar as well as senior security officials from Saudi Arabia, Turkey and Pakistan. December Brent crude futures fell 1.7% to settle at $113.88 a barrel, while December WTI crude futures dropped 1.8% to settle at $99.90 a barrel.
Base Metals
On the London Metal Exchange, the premium of spot copper over the benchmark three-month contract surged to its highest level in two months, signaling intensifying near-term supply pressure. The key spread rose to $195.87 a ton on Tuesday, the widest since a large squeeze neared its end in August. This year's rally in copper to record highs has been driven in large part by expectations that the United States will impose tariffs on refined copper, with large volumes shipped to America tightening supply in other markets. At the close, LME copper rose 1% to $14,474.50 a ton, LME aluminum gained 1.5% to $3,087 a ton, LME nickel added 0.4% to $15,629 a ton, LME zinc climbed 0.7% to $3,842 a ton, LME tin advanced 0.9% to $51,461 a ton, and LME lead rose 0.5% to $1,933 a ton.
Precious Metals
Gold rose after dipping below a key level, drawing bargain buying as traders awaited the Federal Reserve's interest rate decision later this week. Bullion climbed as much as 1.2% to $4,065.73 an ounce. Brent crude's slide below $114 a barrel and lower U.S. Treasury yields also lent support to gold. "Gold is regaining its footing after briefly dipping below $4,000, with the sharp pullback attracting bargain hunters and physical buyers," said Ewa Manthey, a commodities strategist at ING Bank. As of 5 p.m. Eastern time, spot gold was up 1.1% at $4,060.13 an ounce, while spot silver rose 0.9% to $54.4261 an ounce.
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