Oil prices fell on Wednesday as a buildup in U.S. crude inventories deepened concerns about oversupply, though losses were limited by tightness in global fuel markets following attacks on Russian oil infrastructure.

Brent crude futures dropped 71 cents, or 1%, to 64.18 dollars a barrel by 11:11 GMT, after rising 1.1% in the previous session. U.S. West Texas Intermediate (WTI) crude slipped 63 cents, also 1%, to 60.11 dollars, following a 1.4% gain on Tuesday.

According to market sources citing data from the American Petroleum Institute, U.S. crude inventories rose by 4.45 million barrels in the week ending 14 November. Gasoline stocks increased by 1.55 million barrels, while distillate inventories climbed by 577,000 barrels.

Commodity analysts at ING said the report was “generally bearish,” but noted that “market participants appear more concerned about supply risks than the prospect of future oversupply.”

PVM analyst John Evans said Tuesday’s price gains were driven by a tightening diesel market, caused by reduced Russian exports.

U.S. sanctions on Rosneft and Lukoil include a deadline on 21 November for companies to halt dealings with the two major Russian firms.

The U.S. Treasury said Monday that the sanctions—which are already squeezing Russian oil revenues—are expected to curtail the country’s export volumes. Buyers in China and India have already begun shifting to alternative suppliers.

Those supply concerns have been balanced by analysts’ expectations that current global oil production exceeds demand, which is weighing on prices.

Following recent Ukrainian attacks on Russia’s energy infrastructure and port facilities, European diesel refining margins surged on Tuesday to their highest level since September 2023, amid a broader rise in global refining spreads.

Official U.S. inventory data will be released later on Wednesday. A Reuters poll of eight analysts showed expectations for crude stockpiles to have fallen by an average of 600,000 barrels during the week ending 14 November.

The British pound edged lower on Wednesday after UK inflation data for October came in broadly in line with expectations, reinforcing speculation that the Bank of England may cut interest rates next month, while the U.S. dollar strengthened ahead of Nvidia’s earnings and key American data releases.

At the same time, the Japanese yen touched a ten-month low against the dollar following Bank of Japan Governor Kazuo Ueda’s meeting with key ministers, including Finance Minister Satsuki Katayama, who said the government is monitoring markets “with a high degree of vigilance.”

Official data released Wednesday showed UK annual consumer inflation slowed to 3.6% in October from 3.8% in September, the lowest level in 18 months and matching expectations from the Bank of England and economists surveyed by Reuters.

Expectations of a December rate cut grow stronger

The figures reinforced expectations that the Bank of England could proceed with an interest-rate cut in December.

Sanjay Raja, chief UK economist at Deutsche Bank, said: “With the labor market softening more than expected, GDP growth weaker than the Bank of England’s projections, and core inflation consistently coming in below the Bank’s forecasts, we think Governor Andrew Bailey will feel increasingly confident pushing Bank Rate below 4%.”

Sterling slipped 0.17% to 1.3121 dollars, after briefly touching its lowest level since Friday when UK markets were shaken by speculation surrounding the upcoming 26 November budget.

Elsewhere, investors looked for clearer direction as U.S. agencies worked to clear a backlog of delayed data following the long government shutdown.

The dollar index — which tracks the greenback against six major currencies — rose 0.15% to 99.75.

The yen weakened 0.4% to 156.15 per dollar, its lowest level since January.

The dollar strengthened alongside firm demand for U.S. Treasuries, even as Fed rate-cut expectations eased — a sign analysts say likely reflects safe-haven flows.

Francesco Pesole, FX strategist at ING, said: “We are heading into major U.S. releases, so some caution is natural, even though momentum clearly favors the dollar.” He added: “It’s a mix of safe-haven hedging flows and continued market skepticism about a December Fed rate cut.”

Fed funds futures now price a 47% implied probability of a 25-basis-point cut at the 10 December meeting, up from 42.4% the previous day, according to CME’s FedWatch tool.

President Donald Trump renewed his criticism of Fed Chair Jerome Powell on Tuesday, saying: “I’d love to fire the guy who’s there now… but someone is stopping me.” Powell’s term ends in May.

A pivotal moment

Currency traders also kept an eye on corporate earnings, with Nvidia (NVDA.O) set to report third-quarter results later in the day.

Global markets have been under heavy pressure this week, with the S&P 500 recording four straight days of losses amid concern over stretched valuations in AI-linked stocks.

“We have Nvidia earnings today, and it could be a pivotal moment for equities,” said ING’s Pesole. “It’s unusual for a single earnings release to move FX markets, but if the results are extremely strong or extremely weak, the spillover could be significant.”

U.S. jobless claims spike

Adding to market anxiety, Tuesday’s data showed a sharp rise in the number of Americans receiving unemployment benefits between mid-September and mid-October.

Another key test arrives on Thursday with the delayed September nonfarm payrolls report, postponed due to the government shutdown.

As risk appetite weakened further, the Australian dollar fell 0.4% to 0.6485 U.S. dollars, while the New Zealand dollar dropped 0.5% to 0.56300 dollars.

The UK’s annual headline consumer price index rose 3.6% in October, slightly above market expectations of 3.5% and down from the previous reading of 3.8%.

Core CPI increased 3.4% year-on-year, in line with expectations and below the prior reading of 3.5%.

The data indicate easing underlying inflation pressures for Bank of England policymakers and strengthen the case for a potential interest-rate cut in December.

Gold prices rose in European trading on Wednesday, extending their recovery for a second session from a two-week low, supported by safe-haven buying amid a broad selloff across global equities.

Gains were capped, however, by a stronger U.S. dollar, which continued to benefit from hawkish commentary by several Federal Reserve officials — remarks that have pushed down expectations of a December interest-rate cut.

To reassess those expectations, investors are awaiting the release of the Fed’s latest policy-meeting minutes later today, which are expected to offer additional clarity on the future path of U.S. interest rates.

Price Overview

Gold prices rose about 0.8% to 4,098.69 dollars an ounce, up from the session’s opening level of 4,067.19 dollars, after hitting an intraday low of 4,055.72 dollars.

On Tuesday, gold gained 0.55%, its first rise in four sessions, after briefly touching a two-week low of 3,998.04 dollars earlier in the day.

Global Equities

Global stock markets have been under intense pressure this week, with the S&P 500 logging four straight days of losses amid mounting concerns over AI-stock valuations.

U.S. Dollar

The dollar index rose 0.1% on Wednesday, marking a fourth consecutive gain and reaching its highest level in a week, reflecting continued strength in the U.S. currency against major and minor peers.

As always, a stronger dollar makes dollar-priced bullion less attractive to holders of other currencies.

This rise comes as investors favor the dollar as the most attractive asset at the moment, amid growing skepticism that the Fed will cut rates in December — particularly after a wave of hawkish commentary from policymakers.

U.S. Interest Rates

Fed Vice Chair Philip Jefferson said Monday that the central bank needs to “proceed slowly” with further rate cuts.

According to CME’s FedWatch tool, market pricing for a 25-basis-point cut in December is steady at around 47%, while the probability of no change remains at 53%.

Investors will closely monitor the Fed minutes set for release later today to reassess these expectations.

Gold Outlook

Tim Waterer, chief market analyst at KCM Trade, said gold’s momentum has been somewhat constrained by the strong U.S. dollar and uncertainty over the timing of the next Fed rate cut.

He added that a wave of risk aversion in broader markets has kept gold in investor focus as a safe haven, helping limit downside moves.

SPDR

Holdings in the SPDR Gold Trust, the world’s largest gold-backed ETF, were unchanged on Tuesday, holding at 1,041.43 metric tons — the lowest level since November 6.