Oil prices rose 3% in European trade on Wednesday on track for the first profit in three days amid mounting concerns about oil and gas supplies from Russia, after president Vladimir Putin announced a partial military mobilisation. 

Prices were also boosted after OPEC Plus pumped amounts less than agreed upon in August, while the Iranian nuclear deal is facing difficulties. 

Global Prices

US crude rose 2.9% to $86.66 a barrel, while Brent added 3.2% to $93.46 a barrel, with a session-low at $90.20. 

US crude lost 0.9% on Tuesday, while Brent lost 0.8% as investors shun high-risk assets. 

Russian Military Mobilisation

Russian President Vladimir Putin announced a partial military mobilisation in the country , putting the economy in a constant war state amid the ongoing Ukrainian campaign.

Putin accused the west of waging war on Russia and asserted Russia will use every available tool to protest itself and its people against external threats.

The mobilisation means gathering upwards of 300 thousand reserve troops to serve in the military campaign in Ukraine.

OPEC Plus

An internal document from OPEC Plus showed the group's oil production was less than specified targets during August, by nearly 3.583 million bpd, while July production was less by 2.892 million bpd from targets. 

Nuclear Deal

In others news about the Iranian nuclear dear, Russia said negotiations remain stuck, with France asserting the ball is in Iran's court to move forward now.

Difficulties achieving the deal means US and European sanctions on the Iranian oil sector are maintained, in turn preventing their return to markets. 

US Stocks

Initial US data showed commercial crude stocks rose by 1 million barrels in the week ending September 16, the fourth such increase in a row, below estimates of a 2 million barrels build. 

According to the tentative data, total US commercial crude stocks rose to 439 million barrels last week, the highest since August 2021, in a negative sign for demand in the US. 

Now investors await official government data on crude stocks, expected to show a buildup of 2 million barrels last week. 

Dollar rose in European trade against a basket of major rivals for a second session, hitting 20-year highs after Russian President Putin announced military mobilisation. 

The gains come ahead of the Federal Reserve's policy meeting later today, expected to hike rates by 75 basis points to 3.25%. 

The Index

The dollar index rose over 0.6% to 110.87, the highest since June 2002, with a session-low at 110.13, after rising 0.5% yesterday as US treasury yields spike to fresh highs. 

Russian Military Mobilisation 

Russian President Vladimir Putin announced a partial military mobilisation in the country , putting the economy in a constant war state amid the ongoing Ukrainian campaign.

Putin accused the west of waging war on Russia and asserted Russia will use every available tool to protest itself and its people against external threats.

The mobilisation means gathering upwards of 300 thousand reserve troops to serve in the military campaign in Ukraine.

The Federal Reserve

Later today, the Federal Reserve will announce its policy decisions, expected fully to hike rates by 75 basis points to 3.25%, the third such increase in a row.

And there's a 19% chance the Fed might actually raise rates by 100 basis points, heading for 4.5% by March 2023.

Gold prices rose in European trade on haven demand amid mounting geopolitical tensions, with Russian president Vladimir Putin announcing a new military effort to control Ukraine. 

Prices were also boosted by a spike in US 10-year treasury yields ahead of the Federal Reserve's policy decisions later today, expected to hike rates by 75 basis points to 3.25%. 

Prices Today

Gold prices rose 0.7% to $1,676 an ounce, after losing 0.7% on Tuesday, as US treasury yields spike to fresh highs while demand swooned back then on gold futures.

Russian Military Mobilisation 

Russian President Vladimir Putin announced a partial military mobilisation in the country , putting the economy in a constant war state amid the ongoing Ukrainian campaign. 

Putin accused the west of waging war on Russia and asserted Russia will use every available tool to protest itself and its people against external threats. 

The mobilisation means gathering upwards of 300 thousand reserve troops to serve in the military campaign in Ukraine. 

US Yields 

US 10-year treasury yields fell 1.4% on Wednesday off 11-year highs at 3.604%, on track for the first loss in three sessions. 

The decline came after the Russian escalation and mobilisation as it rattled the market for a bit. 

The Federal Reserve 

Later today, the Federal Reserve will announce its policy decisions, expected fully to hike rates by 75 basis points to 3.25%, the third such increase in a row.

And there's a 19% chance the Fed might actually raise rates by 100 basis points, heading for 4.5% by March 2023.

Estimates

Analysts now expect gold prices to hover around $1,680 in the short term, and if the Fed took aggressive action today, prices might plummet to near $1,600. 

The SPDR 

Gold holdings at the SPDR Gold Trust fell 4.63 tones yesterday to a total of 953.32 tones, the lowest since March 2020. 

Sterling declined in European trade for the second straight session against dollar, hitting 37-year lows on economic recession concerns in the UK and doubts about the pace of policy tightening by the BoE this week. 

The dollar hit fresh 20-year highs against a basket of major rivals ahead of the Federal Reserve's policy decisions, expected to hike interest rates by 75 basis points. 

GBP/USD fell 0.6% on Wednesday to 1.1304, the lowest since 1985, after losing 0.4% yesterday, the third loss in a row as US treasury yields spiked to fresh highs. 

Recession 

Economists warned that the UK economy is already in a state of recession, after UK retail sales tumbled past estimates in August, an important indication for consumer health. 

Additionally, such a spate of negative data are casting doubt on the Bank of England's policy decisions this month, and whether it'll hike rates by 50 or 75 basis points. 

An aggressive move by the BoE would contradict a new budget by the UK government to support the economy and easy costs of living for citizens. 

The Dollar

The dollar index rallied over 0.6% on Wednesday for the second straight session, hitting 20-year highs at 110.87 against a basket of major rivals. 

Later today, the Federal Reserve will announce its policy decisions, expected fully to hike rates by 75 basis points to 3.25%, the third such increase in a row. 

And there's a 19% chance the Fed might actually raise rates by 100 basis points, heading for 4.5% by March 2023. 

Estimates

We expect the pound to keep weakening against the greenback, potentially giving up 1.13 for the first time since 1985 and heading for 1.12.