Oil prices fell on Wednesday after the International Energy Agency (IEA) signaled that supply would outpace demand this year, while investors looked ahead to Friday’s meeting between US President Donald Trump and Russian President Vladimir Putin.

Brent crude futures dropped 41 cents, or 0.6%, to $65.71 a barrel by 10:37 GMT, while US West Texas Intermediate (WTI) crude futures fell 50 cents, or 0.8%, to $62.67. Both benchmarks had closed lower on Tuesday.

Giovanni Staunovo, commodity analyst at UBS, said: “Last night’s API oil inventory report, combined with the IEA’s downbeat oil market outlook today, put pressure on prices.”

The IEA said Wednesday it had raised its forecast for oil supply growth this year but lowered its demand estimates due to weak fuel consumption in major economies.

By contrast, the OPEC+ alliance said in its monthly report on Tuesday that it had raised its forecast for global oil demand next year and lowered its supply growth estimates for the US and other non-OPEC producers, signaling a potential tightening in the market.

Independent energy analyst Gaurav Sharma commented: “If we take the average of the IEA and OPEC’s projections for oil demand growth in 2025, between the pessimistic and optimistic ends, the modest figure—just over one million barrels per day—can easily be met by current non-OPEC supply growth alone. So I don’t see a case for prices to rally in the near term.”

In the US, the world’s largest oil consumer, crude inventories rose by 1.52 million barrels last week, according to market sources citing Tuesday’s API data. Gasoline stocks fell, while distillate inventories posted a slight increase.

Analysts polled by Reuters expect today’s Energy Information Administration (EIA) report to show a 300,000-barrel drop in crude inventories last week.

Trump and Putin are set to meet in Alaska on Friday to discuss ending the Russia–Ukraine war, which has roiled oil markets since February 2022.

Staunovo added: “It’s hard to predict what Friday’s meeting might yield, especially if Europeans are not present in Alaska.”

While the Trump administration has sought to downplay expectations of major progress toward a ceasefire—describing the summit as a “listening session”—Ukraine and most European nations have stressed that lasting peace cannot be achieved without Ukraine at the negotiating table.

The US dollar fell to a two-week low on Wednesday after weak US inflation data boosted expectations that the Federal Reserve will cut interest rates next month, while attempts by President Donald Trump to expand his influence over US institutions added pressure on the currency.

The dollar index, which measures the performance of the US currency against a basket of rival currencies, dropped to 97.76, its lowest level since July 28, extending Tuesday’s 0.5% loss.

Data released on Tuesday showed that US consumer prices rose marginally in July, in line with expectations, while the impact of the broad tariffs imposed by Trump on goods prices has so far been limited.

Investors, anticipating an imminent rate cut, welcomed the data and priced in a 98% probability that the Fed will ease policy next month, according to LSEG data.

Francesco Pesole, a strategy analyst at ING, said: “The release of US CPI data was a negative event for the dollar.” He added: “A September rate cut remains strongly priced in.” He noted that while the acceleration in core inflation is not ideal, it is not concerning enough to outweigh the deterioration in the labor market.

Investor confidence in the dollar was further undermined by Trump’s recent attempts to influence the Fed’s independence, after White House spokesperson Karoline Leavitt said on Tuesday that the president is considering suing Federal Reserve Chair Jerome Powell over his handling of the central bank’s headquarters renovation in Washington.

Trump has long been at odds with Powell, repeatedly criticizing him for not cutting interest rates sooner. The US president also attacked Goldman Sachs CEO David Solomon, saying the bank was wrong in predicting that US tariffs would hurt the economy, and questioning whether Solomon is fit to lead the Wall Street institution.

In the currency markets, the dollar’s weakness helped lift both the euro and the British pound; the euro rose 0.3% to $1.1709, briefly hitting its highest level since July 28, while the pound climbed 0.4% to $1.3562, its highest level since July 24.

Data released on Tuesday showed the UK labor market weakened again, despite wage growth remaining strong, which explains the Bank of England’s caution in cutting interest rates.

The Australian dollar rose 0.35% to $0.6552, while the New Zealand dollar gained 0.5% to $0.5986. The Reserve Bank of Australia cut interest rates on Tuesday as expected and signaled that further easing may be needed to meet its inflation and employment goals amid a loss of economic momentum.

In cryptocurrency markets, Bitcoin stalled in its push toward a new record high, falling 0.34% to $119,809, while Ethereum climbed to its highest level in nearly four years at $4,679.

Gracy Lin, CEO of the Singapore branch of crypto exchange OKX, said: “Ethereum’s quiet breakout is driven by real-world adoption and capital confidence,” adding: “On our platform, Ethereum has overtaken Bitcoin to become the most traded asset over the past month.”

Gold prices rose in the European market on Wednesday, extending gains for the second consecutive day, supported by the broad decline of the US dollar against a basket of global currencies.

Moderate inflation data from the United States increased the likelihood of the Federal Reserve cutting interest rates in September, with markets awaiting further economic data on Thursday and Friday.

Price Overview

•Gold prices today: Gold rose by about 0.5% to $3,363.53, from the opening level of $3,348.26, after recording a low of $3,342.79.

•On Tuesday, gold settled with a gain of 0.2%, after earlier hitting a one-week low of $3,331.14 an ounce.

US Dollar

The US Dollar Index fell by 0.35% on Wednesday, deepening losses for the second session in a row, reaching a two-week low of 97.71 points, reflecting continued weakness in the US currency against a basket of global currencies.

As we know, the decline in the US currency makes dollar-priced bullion more attractive to buyers holding other currencies.

US Interest Rates

•Tuesday’s US data showed consumer prices rose moderately in July, with headline inflation unchanged against market expectations, while core inflation saw a slight increase.

•Karl Schamotta, chief market strategist at Corpay, said: Core inflation remains weak, giving policymakers room to maneuver in responding to signs of impending weakness in the labor market.

•Following the data, and according to the CME Group’s FedWatch Tool: the probability of a 25 basis-point rate cut in September rose from 88% to 94%, while the probability of rates staying unchanged fell from 12% to 6%.

•The probability of a 25 basis-point cut in October rose from 94% to 98%, while the probability of no change fell from 6% to 2%.

•To reprice these expectations, investors are awaiting important US data on Thursday and Friday, including producer prices, jobless claims, and monthly retail sales.

Gold Outlook

•Tim Waterer, chief market analyst at KCM Trade, said: The weaker US dollar has contributed to a moderate recovery in gold, with the precious metal fluctuating around $3,350 ahead of the Trump–Putin meeting on Friday.

•Waterer added: If the Alaska meeting produces no resolution and the war in Ukraine continues, gold could head back toward the $3,400 level.

SPDR Holdings

Gold holdings at SPDR Gold Trust, the largest global gold-backed ETF, remained unchanged on Tuesday, keeping the total at 964.22 metric tonnes — the highest level since September 12, 2022.

The euro rose in the European market on Wednesday against a basket of global currencies, maintaining gains for the second consecutive day against the US dollar, and is on the verge of recording its highest level in at least two weeks, as the US currency remains under negative pressure following the release of key US inflation data.

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

Price Overview

•Today’s euro exchange rate: The euro rose against the US dollar by more than 0.1% to $1.1688, from today’s opening price of $1.1674, recording its lowest level at $1.1669.

•The euro ended Tuesday’s session up 0.5% against the dollar, its first gain in the last three days, supported by the rise in expectations of a US interest rate cut in September.

US Dollar

The US Dollar Index fell by about 0.1% on Wednesday, extending losses for the second consecutive session, and is about to surpass a two-week low of 97.90 points, reflecting continued weakness in the US currency against a basket of global currencies.

Data released Tuesday in the US showed a moderate rise in consumer prices in July, which led to an increase in expectations for the Federal Reserve to cut interest rates next month.

Karl Schamotta, chief market strategist at Corpay, said: “Core inflation remains subdued, allowing policymakers room to maneuver in response to signs of impending weakness in the labor market.”

Following this data and according to CME Group’s FedWatch tool: Market pricing for a 25 basis point US interest rate cut in the September meeting rose from 88% to 94%, while pricing for keeping rates unchanged fell from 12% to 6%.

To reprice these expectations, investors are awaiting key US data on Thursday and Friday, including producer prices, jobless claims, and monthly retail sales.

European Interest Rates

•Recent inflation data in the euro area showed that entrenched inflationary pressures persist for European Central Bank policymakers.

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

•Money market pricing for a 25 basis point ECB rate cut in September is currently steady below 30%.

•To reprice these expectations, investors in the coming period are awaiting numerous economic data releases in Europe, in addition to monitoring comments from ECB officials.