Oil prices rose on Wednesday after data from the American Petroleum Institute showed a decline in US crude inventories, while investors awaited further developments in peace talks over the war in Ukraine, with sanctions on Russian crude still in place for now.

Crude had fallen by more than 1% on Tuesday amid optimism that a peace agreement might be near. However, US President Donald Trump acknowledged that Russian President Vladimir Putin may not be willing to reach a deal.

Brent crude futures rose 44 cents, or 0.7%, to $66.23 a barrel by 1000 GMT. US West Texas Intermediate futures for September delivery, expiring on Wednesday, gained 65 cents, or 1%, to $63 a barrel.

Giovanni Staunovo, analyst at UBS, said: “Oil prices seem to come under pressure one day and rebound the next. The API report was somewhat positive, so I assume some of the support for prices comes from that.”

The API data showed US crude stocks fell by 2.42 million barrels, according to market sources on Tuesday, ahead of the official figures due at 1430 GMT.

Staunovo added: “I’m not too sure about the peace deal – we’ll have to see whether any progress is made in the coming days.”

Trump said on Tuesday the US may provide air support as part of a deal to end the Russian war in Ukraine. He had earlier said he was arranging a meeting between Putin and Ukrainian President Volodymyr Zelensky, followed by a trilateral summit with the three leaders. But Russia has not confirmed participation in talks with Zelensky.

Daniel Hynes, senior commodity strategist at ANZ, said in a note on Wednesday: “The chances of a quick resolution to the conflict with Russia now look unlikely.”

Oil also received support from a disruption at a major US refinery due to flooding.

BP said on Tuesday that operations at its 440,000-barrel-per-day refinery in Whiting, Indiana, were affected by flooding from a severe thunderstorm, which could impact crude demand at the facility – a key fuel supplier in the US Midwest market.

The US dollar held steady on Wednesday as traders awaited Federal Reserve Chair Jerome Powell’s speech at the annual Jackson Hole symposium later this week, seeking clues about the path of monetary policy.

In contrast, the New Zealand dollar fell after the central bank cut its cash rate by a quarter percentage point to 3.0%, and revealed that its board had even discussed a larger half-point reduction.

The dollar index, which measures the greenback against six major peers, remained stable at 98.319 after touching its highest level in more than a week at 98.441 earlier in the day. Market focus is firmly on Powell’s remarks on Friday, as traders look for signals on whether he might push back against market pricing for a rate cut at the Fed’s September 16-17 meeting.

Current expectations show traders assigning about an 85% probability to a quarter-point cut next month, with a total of roughly 54 basis points in easing anticipated by year-end.

Kirstine Kundby-Nielsen, FX analyst at Danske Bank, said: “Powell will likely try to strike a balanced tone, but there is a risk he comes across as hawkish on Friday. Some of the inflation dynamics we have seen will make the Fed more cautious.”

Traders had raised bets on rate cuts after weaker-than-expected US jobs data earlier this month, alongside consumer price data showing only limited tariff-driven pressures. However, stronger-than-forecast producer prices last week complicated the outlook.

Powell himself has been hesitant to cut rates, citing expectations of higher prices due to tariffs this summer.

Later on Wednesday, the Fed is set to release minutes from its July 29-30 meeting, when it held rates steady. But these may offer little guidance, given they preceded the weak jobs report.

The New Zealand dollar slid 1.3% to $0.5815, its lowest since April 11, after policymakers also lowered their forecast for the terminal cash rate to 2.55% from 2.85% in May.

Prashant Newnaha, rates strategist at TD Securities, wrote in a client note: “The market was not expecting the bank to send such a strong dovish signal of further cuts ahead.” He now expects the cash rate to fall to 2.5% by November.

In Europe, the Swedish krona was steady after the central bank left its policy rate unchanged at 2%, in line with expectations.

The euro dipped 0.1% to $1.1636, while the dollar rose 0.1% against the Swiss franc to 0.8078 but eased 0.1% versus the yen to 147.61.

Sterling edged higher against both the euro and the dollar after UK inflation data beat expectations, leaving Britain with the highest inflation challenge among major advanced economies. Most of the rise in services inflation was driven by higher airfares, which some economists attributed to the timing of school holidays.

Chris Turner, head of research at ING, said: “The Bank of England is more concerned about food inflation, which hasn’t changed much in today’s report. We doubt the CPI print will significantly alter the Bank’s policy stance.”

In cryptocurrencies, Bitcoin stabilized around $113,897 after earlier dropping to $112,578.38, its lowest since August 3, pressured by the stronger dollar.

Silver prices slipped in the European market on Wednesday to a two-week low, deepening losses for a second consecutive day and falling below $37 an ounce, pressured by the rise of the US dollar in the foreign exchange market.

Demand for the US currency remains strong as the best available investment, especially amid growing doubts over the likelihood of a Federal Reserve rate cut in September.

To reassess those expectations, investors are awaiting later today the release of the minutes from the latest Federal Reserve meeting, along with the upcoming Jackson Hole symposium.

Price Overview

• Silver prices fell by around 1.2% to $36.96 an ounce, the lowest since August 4, from the opening level of $37.39, after hitting a high of $37.44 earlier in the session.

• At Tuesday’s settlement, silver lost 1.7%, its biggest daily drop since July 30, pressured by gains in the US dollar and Treasury yields.

US Dollar

The dollar index rose 0.15% on Wednesday, extending gains for a third straight session to the highest level in over a week at 98.44 points, reflecting continued strength of the greenback against a basket of major and minor currencies.

This rise comes as investors seek the dollar as the most attractive asset, while awaiting comments from Federal Reserve Chair Jerome Powell on Friday in Jackson Hole, where markets expect a pushback against pricing in a September rate cut.

US Interest Rates

• According to CME’s FedWatch tool, markets are currently pricing in an 83% chance of a 25-basis-point rate cut at the September meeting, and a 17% chance of no change.

• For October, markets are pricing in a 92% probability of a 25-basis-point cut, and an 8% chance of rates being left unchanged.

• To reprice these expectations, investors are closely monitoring today’s Fed minutes and upcoming remarks from key Fed policymakers.

Silver Outlook

At Economies.com, we expect that if the Fed’s comments prove more hawkish than markets anticipate, the odds of a September rate cut would diminish, putting further downward pressure on non-yielding assets, especially precious metals like gold and silver.

Gold prices rose in the European market on Wednesday, attempting to recover from a three-week low recorded earlier in Asian trading, supported by bargain hunting at lower levels.

However, the recovery remains capped by strength in the US dollar, which is being bought as the preferred safe-haven investment ahead of the release of the Federal Reserve’s latest meeting minutes.

The Price

•Spot gold rose 0.35% to $3,327.65, up from the session’s opening level of $3,315.84, after touching an intraday low of $3,311.58, the weakest level since August 1.

•At Tuesday’s settlement, gold lost 0.5%, marking its second straight daily decline under pressure from a stronger US dollar and higher US bond yields.

The US Dollar

The dollar index rose 0.15% on Wednesday, extending gains for a third consecutive session and reaching a one-week high of 98.44, reflecting continued strength in the US currency against a basket of major and minor counterparts.

Markets now turn their attention to Fed Chair Jerome Powell’s speech on Friday at Jackson Hole, where traders are looking for any pushback against market pricing of a rate cut next month.

US Interest Rates

•According to CME’s FedWatch Tool, the probability of a 25 basis-point rate cut in September is currently priced at 83%, with a 17% chance of no change.

•For October, probabilities are priced at 92% for a 25 basis-point cut and 8% for no change.

•Investors are closely watching the Fed minutes due later today and comments from policymakers to reassess these expectations, alongside Powell’s upcoming remarks at Jackson Hole.

Gold Outlook

Kelvin Wong, market analyst at OANDA for Asia-Pacific, said the stronger US dollar and improved risk appetite following recent geopolitical developments are weighing on gold, with markets awaiting Powell’s remarks at Jackson Hole for further direction.

SPDR Gold Trust

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 3.16 metric tons on Tuesday, bringing the total down to 962.21 metric tons. This compares with 965.37 metric tons, the highest level since September 9, 2022.