Oil futures pulled back as signs emerged that some recent supply disruptions in the Middle East were beginning to ease, with traders also adjusting positions following a sharp run-up in prices. Meanwhile, London copper advanced as US Treasury yields steadied ahead of the Federal Reserve's policy decision on Wednesday. Gold later turned lower after the Fed announced its rate hike and officials signaled the possibility of another increase this year.

Crude: Brent Declines as Mideast Supply Disruptions Show Signs of Easing

Crude futures retreated on indications that some supply interruptions in the Middle East were starting to subside, while market participants recalibrated positions after recent sharp gains. Brent crude settled lower, closing near $106 per barrel, while WTI fell more than 3%. This followed Saudi Arabia's statement that it was seeking to restore roughly half of its capacity within the coming days after last week's drone attacks shut down its East-West pipeline. The kingdom is also boosting sales of crude loaded outside the Strait of Hormuz. Meanwhile, Libya's oil production has returned to normal after several fields halted output earlier this week. Over the previous two sessions, oil prices had climbed 4% amid concerns that conflict with Iran could trigger fresh supply disruptions, including the possibility of a prolonged closure of Saudi Arabia's East-West pipeline. Brent's 14-day relative strength index rose above 70 into overbought territory, suggesting a pullback may be imminent. With the outbreak of war in the Middle East and the ongoing Russia-Ukraine conflict, oil prices have surged nearly 80% this year. The rally in crude, along with even larger jumps in fuel costs, has intensified worries about global inflation. The Federal Reserve joined other central banks in tightening policy, voting on Wednesday to raise interest rates by 25 basis points in response to price pressures. Charu Chanana, chief investment strategist at Saxo Markets in Singapore, noted that the decline in oil prices should currently be viewed as "a temporary breather rather than a clear reversal," warning that risks remain elevated. She added that any further escalation or extended supply disruptions could quickly reignite upward pressure on prices. Brent November futures settled down 2.7% at $105.83 per barrel, while WTI October futures fell 3.2% to close at $102.43.

Copper Rises as Treasury Yields Ease Ahead of Fed Decision

Copper prices advanced as US Treasury yields steadied before the Fed's rate announcement later on Wednesday. However, prices remain well below the record highs hit last week, as supply tightness triggered by large inflows of copper into the US market has begun to ease. Spot copper traded at a discount of $37 per tonne to the three-month contract, indicating ample supply, a reversal from previous weeks when the opposite held true and pointed to market tightness. LME copper rose 1.1% to $14,232.50 per tonne; LME aluminium gained 0.5% to $3,269 per tonne; LME nickel climbed 1.2% to $16,167 per tonne; LME tin added 0.9% to $52,424 per tonne; LME lead rose 0.6% to $1,885.50 per tonne; and LME zinc slipped 0.3% to $3,812.50 per tonne.

Gold Reverses Lower After Fed Hikes and Signals Hawkish Stance

Gold turned lower after Fed officials indicated the possibility of another rate hike this year. The Fed implemented its first rate increase in three years on Wednesday. Fed Chair Kevin Warsh emphasized the threat inflation poses to the US economy during his post-decision press conference, prompting gold to drop as much as 1.3%. The Fed's dot plot suggested one more hike could be forthcoming by the end of 2026. Gold had earlier gained as much as 1.7% before reversing, reflecting a broad market interpretation of the Fed's guidance as hawkish. Elias Haddad, global head of market strategy at Brown Brothers Harriman, said this "hawkish hike" is pressuring gold through a stronger dollar and higher real yields. As of 4:15 PM in New York, spot gold was down 0.6% at $4,264.30 per ounce, poised for a third consecutive session of declines. Rate increases typically weigh on gold, which yields no interest.