Oil prices up 2% amid ceasefire hopes; US interest rate speculation as US dollar weakens
Following the second day of a US-Qatari-sponsored truce between Israel and Iran, and with US President Donald Trump hinting at a possible ceasefire in Gaza, oil prices rebounded after a sharp 6% drop on Tuesday.
The investors cautiously welcomed the pause in hostilities and anticipated a potential US interest rate cut, which provided further support to the oil market.
Brent crude futures climbed $1.31, or 2%, to $68.45 a barrel, while US West Texas Intermediate crude rose $1.24, or 1.9%, to $65.61 a barrel.
These gains come after both benchmarks hit their lowest levels since early June following Israel’s surprise attacks on Iran’s key military sites on June 13.
Market analyst Kelvin Wong of Oanda noted that geopolitical risk premiums have declined alongside weaker-than-expected US economic data, reinforcing expectations of monetary easing by year-end.
Independent analyst Tina Teng projects oil prices to stabilize between $65 and $70 per barrel as markets await further US data and the Federal Reserve’s interest rate decisions.
In currency markets, the US dollar struggled to regain strength after investors sold off the safe-haven currency following the ceasefire news.
The euro hovered near a two-year high, while the British pound and risk-sensitive currencies like the Australian and New Zealand dollars showed modest gains. Despite recent optimism, some experts caution that the conflict’s risks remain unresolved, which could continue to influence commodity and currency markets.
Gold prices edged up slightly, supported by the dollar’s decline and falling US Treasury yields.
Spot gold increased 0.1% to $3,328.18 an ounce, recovering from a two-week low, while US gold futures rose 0.3% to $3,342.30. Other precious metals showed mixed movements, with silver up marginally and platinum and palladium slipping slightly.
