Oil prices held near their highest levels in almost four months during Wednesday’s trading, supported by disruptions to US crude production caused by a severe winter storm, alongside a weaker US dollar and ongoing supply issues in Kazakhstan.

By 10:17 GMT, Brent crude futures slipped 39 cents, or 0.6%, to $67.18 per barrel, while US West Texas Intermediate crude fell 22 cents, or 0.4%, to $62.17 per barrel. Both benchmark contracts had climbed around 3% in Tuesday’s session.

This performance came amid continued weakness in the US dollar, which is trading near a four-year low against a basket of major currencies, making dollar-priced commodities such as oil cheaper for holders of other currencies.

On the supply side, ship-tracking firm Vortexa said US Gulf Coast crude oil exports fell to zero on Sunday, before recovering on Monday, after a powerful winter storm swept across large parts of the United States.

Gradual recovery in Kazakhstan

Lost output in Kazakhstan also helped support prices, although the OPEC+ member hopes to gradually resume production at the Tengiz field within a week. Sources familiar with the matter said, however, that the recovery process could take longer than expected.

In the same context, sources said CPC, the operator of the pipeline that carries around 80% of Kazakhstan’s oil exports, has restored full loading capacity at its Black Sea terminal after completing maintenance work on one of its berths that was damaged by drone attacks.

The OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries, Russia, and other allies, is expected to maintain its decision to pause oil output increases for March at a meeting scheduled for February 1, according to delegates from the group.

On the other hand, prices could face some pressure as US officials work on issuing a general license that would ease some of the sanctions imposed on Venezuela’s energy sector, according to sources familiar with the discussions.

On the geopolitical front, US officials said an American aircraft carrier and accompanying warships have arrived in the Middle East, strengthening President Donald Trump’s ability to defend US forces or carry out potential military actions against Iran. This development has heightened concerns over possible disruptions to oil supplies from OPEC’s fourth-largest crude producer.

On the demand side, a Reuters poll showed that US crude oil and gasoline inventories are expected to rise in the week ended January 23, while distillate stockpiles are likely to decline. Official government data are due to be released later today at 15:30 GMT.

The US dollar regained some balance on Wednesday after a sharp sell-off, as US President Donald Trump appeared largely unconcerned about the currency’s recent weakness, while strong corporate earnings kept global equity markets near record highs ahead of the Federal Reserve’s policy decision.

The US currency edged slightly higher, moving away from levels close to a four-year low. However, market sentiment remained fragile following the largest bout of selling since Trump’s tariff measures rattled markets last April.

European equities declined, while US equity futures pointed to a positive opening on Wall Street. Japan’s Nikkei index posted modest gains, while the MSCI world equity index hovered near its all-time highs.

Jan von Gerich, chief market analyst at Nordea, said: “Last week, when it looked like there was a broad flight from US assets, we saw equities fall, pressure on Treasuries, and a weaker dollar. Now the story is much more focused on the dollar itself.” He added: “The most important aspect of tonight’s Fed meeting is that Jerome Powell may now address political pressure, something he has completely avoided so far.”

The Federal Reserve is widely expected to keep interest rates unchanged at a meeting overshadowed by a criminal investigation launched by the Trump administration into Fed Chair Jerome Powell, ongoing efforts to remove board member Lisa Cook, and the approaching announcement of a nominee to succeed Powell when his term ends in May.

Currency moves

The dollar index, which tracks the US currency against six major peers, rose 0.25% to 96.16 points, after falling more than 1% on Tuesday to its lowest level in four years.

Trump said on Tuesday that the dollar’s value was “great” when asked whether he thought the currency had fallen too far.

While this stance is not new, traders interpreted the remarks as a signal encouraging further selling pressure on the dollar, at a time when markets are bracing for potential coordinated intervention by the United States and Japan to support the yen.

The dollar’s decline pushed the euro above the $1.20 level for the first time since 2021, while the Australian dollar briefly climbed above 70 cents, marking a three-year high. Gold surged to a fresh record, and dollar-denominated commodity prices also advanced.

Steve Englander, head of G10 FX research at Standard Chartered in New York, said: “Officials usually push back against sharp currency moves, but when the president appears indifferent or even supportive of them, that encourages dollar sellers to stay in the trade.”

Strong earnings

Elsewhere, ASML, the world’s largest supplier of chipmaking equipment, reported fourth-quarter bookings that exceeded expectations, signaling continued strength in AI-related demand. The company’s shares jumped 5%, outperforming the largely flat European equity market.

On Wall Street, in addition to the Fed decision, investors are awaiting earnings results from major technology firms, with Meta and Tesla set to report after the market close.

Dollar weakness continued to support other assets, with gold surging to a new record above $5,280 per ounce, while Brent crude rose to a four-month high at just above $68 per barrel.

In Asia, stronger-than-expected Australian inflation data for December reinforced expectations of an early interest rate hike, potentially as soon as next week. ANZ and Westpac revised their forecasts accordingly, bringing all four of Australia’s major banks into alignment on a rate hike scenario.

By contrast, Indonesia’s stock market plunged 7% after MSCI raised concerns over opaque ownership and trading structures and decided to suspend updates to the inclusion of Indonesian stocks in its global indices followed by investors worldwide.

Gold prices rose in European trading on Wednesday, extending gains for an eighth consecutive session and continuing to set new record highs after breaking above the $5,300-per-ounce level for the first time in history. The rally was driven by strong safe-haven demand, alongside a weak US dollar that is attempting to recover from a four-year low.

Later today, the Federal Reserve will conclude its first regular policy meeting of 2026 to assess the appropriate monetary stance for the world’s largest economy, with markets almost fully pricing in no change to interest rates.

Price overview

• Gold prices today: Gold rose by 2.6% to $5,311.60 per ounce, marking a new all-time high, from an opening level of $5,178.32, while the session low was recorded at $5,157.42.

• At Tuesday’s settlement, gold gained about 3.35%, marking a seventh consecutive daily advance and the largest one-day increase since August 16, driven by record safe-haven demand and a sharp drop in the US dollar following comments by Trump.

US dollar

The US dollar index rose by more than 0.4% on Wednesday, beginning to recover from a four-year low at 95.55 points, and heading for its first gain in five sessions, reflecting a rebound in the US currency against a basket of global peers.

Beyond bargain buying from depressed levels, the dollar’s recovery comes ahead of the release of decisions from the Federal Reserve’s first policy meeting of the year.

The US dollar has faced heavy pressure this month due to several factors, including policies of US President Donald Trump and concerns over the independence of the Federal Reserve.

In addition, a dispute between Republicans and Democrats over funding for the Department of Homeland Security, following the killing of a second US citizen by federal immigration officers in Minnesota, has raised fears of another US government shutdown.

Trump said on Tuesday that the dollar is “looking for its natural level,” a comment that analysts interpreted as a green light to sell the US currency.

US consumer confidence fell to its lowest level in more than 11 and a half years in January, amid growing concerns over a weakening labor market and rising prices.

Federal Reserve

The Federal Reserve will conclude later today its first policy meeting of 2026 to discuss the appropriate monetary policy path, with expectations firmly centered on keeping US interest rates unchanged at the 3.75% level.

The interest rate decision and policy statement are due at 19:00 GMT, followed by a press conference by Federal Reserve Chair Jerome Powell at 19:30 GMT.

Powell’s remarks are expected to provide clearer signals on the future path of US interest rates this year, particularly amid ongoing economic developments and mounting concerns over the independence of monetary policy in the United States.

Carol Kong, currency strategist at Commonwealth Bank of Australia, said markets are likely to focus more on questions surrounding the Federal Reserve’s independence than on interest rate expectations.

She added that if Powell were to step down as a governor after his term as Fed chair ends in May, it could reinforce the perception that he is yielding to political pressure, potentially heightening concerns over threats to the Fed’s independence and posing risks to the dollar.

US interest rates

• According to CME Group’s FedWatch tool, the probability of keeping US interest rates unchanged at the January 2026 meeting currently stands at 97%, while the odds of a 25-basis-point rate cut are priced at 3%.

• Investors are currently pricing in two US rate cuts over the coming year, while Federal Reserve projections point to a single 25-basis-point cut.

Gold outlook

Kelvin Wong, market analyst for Asia-Pacific at OANDA, said gold’s rally reflects its very strong indirect correlation with the US dollar. He added that Tuesday’s surge in US trading followed a casual comment by Trump in response to a question about the dollar, which hinted at a broad consensus within the White House in favor of a weaker dollar going forward.

Deutsche Bank said on Tuesday that gold prices could rise to $6,000 per ounce in 2026, citing sustained investment demand as central banks and investors increase allocations to non-dollar and tangible assets.

SPDR Gold Trust

Gold holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by about 0.85 metric tons on Tuesday, bringing total holdings to 1,087.38 metric tons, the highest level since May 3, 2022.

The euro fell in the European market on Wednesday against a basket of global currencies, retreating from a five-year high versus the US dollar and heading for its first loss in five sessions, amid corrective moves and profit-taking, alongside a rebound in the US currency ahead of the Federal Reserve’s monetary policy decision.

The historic trade agreement between Europe and India has reinforced positive expectations for the continent’s economic growth. Beyond securing supply chains, the deal opens access to the world’s largest consumer market for European mid-sized companies and the services sector, providing the European economy with additional resilience against global trade shocks.

Price overview

• Euro exchange rate today: The euro fell 0.55% against the dollar to $1.1975, from an opening level of $1.2039, after touching an intraday high of $1.2046.

• The euro ended Tuesday’s session up 1.35% against the dollar, marking a fourth consecutive daily gain and its largest rise since last August, after hitting a five-year high of $1.2083.

• Those gains were driven by accelerating US dollar selling following comments by Donald Trump on what he described as the “fair value” of the US currency.

US dollar

The US dollar index rose more than 0.4% on Tuesday, starting to recover from a four-year low of 95.55 points and heading for its first gain in five sessions, reflecting a rebound in the US currency against a basket of global currencies.

Beyond bargain-hunting from low levels, the dollar’s recovery comes ahead of the outcome of the Federal Reserve’s first monetary policy meeting of the year.

The Fed is widely expected to leave interest rates unchanged at around 3.75%, while stressing the need for more time to assess economic developments before taking any further policy steps.

Carol Kong, currency strategist at Commonwealth Bank of Australia, said: “I think markets are likely to focus more on questions around the Federal Reserve’s independence rather than interest rate expectations.”

Kong added: “If Powell were to choose to step down from his role as governor after his term as Fed chair ends in May, that could reinforce the perception that he is yielding to political pressure, increasing concerns about the Fed’s independence… and that would pose a risk to the dollar.”

The US dollar has faced heavy pressure this month due to factors including the policies of US President Donald Trump and concerns over the independence of the Federal Reserve.

In addition, a dispute between Republicans and Democrats over funding for the Department of Homeland Security, following the killing of a second US citizen by federal immigration officers in Minnesota, has raised fears of another US government shutdown.

Donald Trump said on Tuesday: “The dollar is searching for its natural level, and that’s fair,” prompting analysts to argue that Trump is effectively giving the green light to sell the US currency.

European economy

Supported by the trade agreement with India, markets have become more optimistic about the outlook for the European economy. This strategic partnership helps diversify supply chains and expand the role of the services sector in a vast consumer market, supporting the sustainability of European economic growth and reducing vulnerability to global trade disputes.

The European Union and India reached a historic trade agreement this week after nearly 20 years of difficult negotiations, which European Commission President Ursula von der Leyen described as “the mother of all deals.”

European interest rates

• Market pricing for a 25-basis-point interest rate cut by the European Central Bank in February remains steady at around 25%.

• Traders have recently revised their expectations from rates remaining unchanged throughout the year to at least one 25-basis-point cut.

• To reprice these expectations, investors are awaiting further economic data from the euro area, particularly on inflation, employment, and wages.