Oil prices rose on Wednesday, rebounding from a five-week low recorded the previous day, as traders focused on US President Donald Trump’s threat to impose higher tariffs on India over its purchases of Russian crude, along with a larger-than-expected drop in US crude inventories.

Brent crude futures rose by 90 cents, or 1.3%, to $68.54 a barrel by 09:36 GMT, while US West Texas Intermediate (WTI) gained 92 cents, or 1.4%, to reach $66.08.

Both benchmarks had dropped by more than $1 on Tuesday, closing at their lowest levels in five weeks and marking a fourth consecutive session of losses.

Ashley Kelty, analyst at Panmure Liberum, said: “Oil prices are rising today as markets await reactions from India and China to the threat of secondary sanctions.”

She added: “There are expectations that India might reduce its purchases of Russian crude, though I don’t believe it will stop entirely — the country is making extraordinary profits from cheap Russian oil.”

The market was supported by Trump’s renewed threat on Tuesday to impose higher tariffs on India due to its energy dealings with Russia. India, along with China, is among the largest buyers of Russian oil.

In a related development, US envoy Steve Witkoff arrived in Moscow on Wednesday on an emergency mission aimed at achieving a breakthrough in the Ukraine war — just two days before Trump’s deadline for Russia to agree to a peace deal or face new sanctions.

Analysts at Roth Capital Markets wrote in a Tuesday evening note: “Overall, the outlook for the Russia-Ukraine conflict remains uncertain, but the ongoing war and threats of escalating tariffs are likely to keep oil prices supported in the near term until the potential impact of those tariffs on oil exports becomes clearer.”

They added: “We expect limited impact on Russian oil exports, as we believe China can absorb the vast majority of the country’s crude.”

The market also found support from a decline in US crude inventories last week. According to two sources citing data from the American Petroleum Institute on Tuesday, inventories fell by 4.2 million barrels.

That figure far exceeds the 600,000-barrel draw forecasted in a Reuters poll for the week ending August 1.

Giovanni Staunovo, analyst at UBS, commented: “Yesterday’s API data showing a draw in US crude stocks was supportive for prices,” adding that “supply disruption fears from US-India tensions are already priced into the market.”

The US dollar remained confined within its recent trading range on Wednesday, as investors chose to stay neutral following another round of weak US economic data and ahead of President Donald Trump’s upcoming appointment to the Federal Reserve Board.

Trump said on Tuesday that he would decide on a nominee to replace outgoing board member Adriana Kugler by the end of the week, and has narrowed the shortlist for the next Fed Chair — to succeed Jerome Powell — to four candidates.

That same day, data showed that US services sector activity remained unexpectedly flat in July, while input costs surged at their fastest pace in nearly three years, highlighting the economic impact of Trump’s tariffs, which are also starting to weigh on corporate profits.

Still, traders were cautious about entering new positions until the Federal Reserve’s direction becomes clearer, amid growing concerns that partisan loyalty could creep into the traditionally reserved and independent world of monetary policy.

The dollar last rose by 0.1% against the Japanese yen to 147.78, while the euro held steady at $1.1577. The British pound slipped 0.1% to $1.329.

Francesco Pesole, strategist at ING Bank, wrote in a research note: “Trump’s public attacks on the Bureau of Labor Statistics over job data revisions haven’t had a major market impact so far, but it’ll be telling if the new Fed Chair nominee echoes that narrative. If that happens, it could fuel fears of the Fed disconnecting from official data — a scenario we view as clearly negative for the dollar.”

Although the dollar’s moves have been quiet this week, the currency has yet to recover from Friday’s sharp losses — its biggest single-day drop in nearly four months — after a troubling jobs report.

Trump had fired BLS Commissioner Erica McEnturfer last week following the release of July’s jobs report.

The dollar rose by 0.1% against a basket of currencies to 98.785, still well below Friday’s high of 100.25, reached just before the nonfarm payrolls data was released.

Markets are still pricing in an 86.5% chance of a Fed rate cut in September, with roughly 56 basis points of easing priced in by year-end.

However, data such as Tuesday’s ISM services PMI highlights the complexity of the Fed’s challenge — balancing price pressures from Trump’s tariffs with signs of a weakening US economy.

Ray Attrill, head of FX strategy at National Australia Bank (NAB), said: “The ISM services index clearly smells of stagflation… and that’s a double-edged sword in terms of monetary policy implications.”

He added: “For now, we think the market may be showing too much confidence in a September move being a done deal.”

US Treasury yields rose, with the 10-year yield climbing 4.2 basis points to 4.238%, and the 2-year yield rising 2.9 basis points to 3.774%, after a $58 billion auction of three-year notes that analysts viewed as relatively weak, with a bid-to-cover ratio of 2.53.

More auctions are scheduled this week, including $42 billion in 10-year notes on Wednesday and $25 billion in 30-year bonds on Thursday.

Among other currencies, the Australian and New Zealand dollars both rose 0.3%, with the Aussie reaching $0.64895 and the Kiwi at $0.59181.

Gold prices declined in European markets on Wednesday for the first time in five sessions, retreating from a two-week high due to active correction and profit-taking. However, further losses were limited by a weaker US dollar against a basket of global currencies.

Trading remained within a tight range as investors avoided building large positions ahead of President Donald Trump’s upcoming decisions on Federal Reserve appointments.

The Price

• Gold prices today: Gold fell by 0.35% to $3,369.15, down from the opening level of $3,380.64. The session high was $3,385.41.

• At Tuesday’s settlement, gold prices rose by 0.2%, marking a fourth consecutive daily gain, and hit a two-week high of $3,390.51 per ounce, supported by rising expectations of a US interest rate cut in September.

The US Dollar

The US Dollar Index declined by 0.1% on Wednesday, resuming losses after a two-day pause and nearing a two-week low — reflecting weakness in the US dollar against global currencies.

Market pricing for a 25-basis-point US interest rate cut in September rose from 85% to 90% following data showing an unexpected slowdown in US services activity during July.

Trump Appointments

Markets are closely watching President Donald Trump’s nominations to the Federal Reserve following the resignation of Governor Adriana Kugler last Friday, as well as his pick for the head of the Bureau of Labor Statistics.

Trump stated on Tuesday that he would soon announce decisions regarding Kugler’s short-term replacement, including his choice for the next Federal Reserve Chair. Treasury Secretary Scott Bessent has been ruled out as a candidate to succeed current Chair Jerome Powell, whose term ends in May 2026.

Trump said that Bessent “does not want” to become Fed Chair, but noted that four other candidates remain in contention.

US Interest Rates

• San Francisco Fed President Mary Daly stated on Monday that, amid increasing evidence of labor market weakness and no indication of ongoing inflation from tariffs, the time has come to lower interest rates.

• According to CME Group’s FedWatch Tool, the probability of a 25-basis-point rate cut in the September meeting currently stands at 88%, while the chance of no change is at 12%.

• For the October meeting, the probability of a 25-basis-point cut is holding at 95%, with a 5% chance of no change.

• To reprice these expectations, investors are awaiting comments from several Federal Reserve officials throughout the day.

Gold Outlook

Bryan Lan, managing director at Singapore-based trading firm GoldSilver Central, said: “We see gold holding up, and in fact, it’s slightly trending higher.” He added: “We expect gold to test the upper end of the trading range near $3,393, and possibly even $3,400.”

SPDR Fund

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by approximately 1.14 metric tons on Tuesday — the second consecutive daily increase — bringing the total to 955.94 metric tons, the highest level since July 28.

The euro rose in European markets on Wednesday against a basket of global currencies, extending its gains for the second consecutive day against the US dollar and nearing a two-week high, driven by growing concerns over Federal Reserve stability.

Expectations of a European interest rate cut in September have declined due to persistent inflationary pressures on European Central Bank policymakers. To reprice these expectations, investors are awaiting further economic data from the Eurozone.

The Price

• EUR/USD exchange rate today: The euro rose against the dollar by 0.1% to $1.1586, up from today’s opening price of $1.1575. The lowest level recorded was $1.1564.

• The euro closed Tuesday up by around 0.1% against the dollar, resuming gains that had paused the previous day due to correction and profit-taking from a two-week high of $1.1597.

The US Dollar

The US Dollar Index declined by 0.1% on Wednesday, resuming losses that had paused for two days, and moving back toward a two-week low — reflecting weakness in the US dollar against a basket of global currencies.

Market pricing for a US interest rate cut in September rose from 85% to 90% after data showed an unexpected slowdown in US services sector activity in July.

Markets are focusing on President Donald Trump’s nominations to the Federal Reserve following the resignation of Governor Adriana Kugler last Friday, as well as his pick for the next head of the Bureau of Labor Statistics.

Trump stated on Tuesday that he will soon announce decisions regarding Kugler’s short-term replacement, including his choice for the next Federal Reserve Chair. Treasury Secretary Scott Bessent was ruled out as a candidate to succeed current Chair Jerome Powell, whose term ends in May 2026.

Trump said that Bessent “does not want” to become Fed Chair, but noted that four other candidates are in the running for the position.

European Interest Rates

• The Consumer Price Index in Europe rose by 2.0% in July, above market expectations of a 1.9% increase and matching the previous reading of 2.0%.

• This data highlights ongoing inflationary pressures on policymakers at the European Central Bank.

• According to Reuters sources, a clear majority at the latest ECB meeting expressed a preference to keep interest rates unchanged in September — for the second consecutive meeting.

• Market pricing of a 25-basis-point rate cut by the ECB in September is currently holding below 30%.

• To reprice these expectations, investors are closely watching upcoming economic data in Europe, along with comments from ECB officials.