Oil Retreats; Dow Jones Posts Worst Week Since March

Market Wrap-up: Oil Eases; Treasury Yields Rise and Equities Diverge

Oil prices fell for a third consecutive session on 18 September, as concerns over the potential impact of Saudi Arabia’s East-West pipeline closure on crude supplies eased. WTI crude declined 1.6% to $100.30 a barrel, while Brent fell 0.9% to $103.87. For the week, WTI was nearly unchanged, while Brent lost almost 1%.

Prices had risen more than 5% since a drone attack, which Saudi officials said originated from Iraq, damaged the pipeline the previous Thursday and forced it to suspend operations. However, JPMorgan’s Natasha Kaneva said oil flows from the Middle East remained surprisingly strong despite the disruption.

The bank estimated regional oil flows averaged around 17 million barrels per day over the previous 10 days, approximately 6 million barrels per day below the 2025 average.

Kaneva noted that Saudi Arabia had increased shipments through the Strait of Hormuz, although she cautioned that these levels could be difficult to sustain. Meanwhile, RBC Capital Markets’ Helima Croft warned that risks to crude and refined-product supplies remained significant. Rapidan Energy estimated that the pipeline disruption could constrain Saudi crude production and exports until at least the end of September.

Spot gold rose 0.3% to $4,352.39 an ounce, reaching its highest level in a week and recording its first weekly gain in four weeks. Lower oil prices eased concerns over persistent inflation, while a stronger US dollar, which reached its highest level in more than seven weeks, limited gold’s advance. US gold futures fell 0.2% to $4,390.30 an ounce.

The Federal Reserve raised interest rates by 25 basis points on Wednesday, bringing the target range to 3.75%-4%, and signalled the possibility of further increases in the coming months.

US equities ended Friday’s session mixed. The Dow Jones Industrial Average fell 0.18% to 51,682.64, while the S&P 500 rose 0.17% to 7,650.50 and the Nasdaq Composite gained 0.39% to 26,522.55.

For the week, the Dow lost 1.7%, marking its third consecutive weekly decline and its worst performance since March. The S&P 500 slipped around 0.1%, while the Nasdaq gained 0.7%. US 10-year Treasury yields rose nearly 6 basis points to 5.006%, after exceeding 5% and reaching their highest level since July 2007 during the week.

Investors also assessed the outlook for further Fed tightening. Scott Welch, chief investment officer at Certuity, said the latest rate increase had removed some uncertainty, but warned that a new tightening cycle could weigh on equities in the coming months. He also expected Treasury yields to remain under upward pressure and oil prices to stay elevated for several months.

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DXY:

Key takeaway:

• The US dollar rose to its highest level in more than seven weeks, limiting gold’s advance.

Technical Outlook:

• Daily Bias: Bullish
• Support: 100.00
• Resistance: 100.56

Gold:

Key takeaway:

• Spot gold rose 0.3% to $4,352.39 an ounce, recording its first weekly gain in four weeks.
• Lower oil prices eased inflation concerns, while dollar strength limited the advance.

Technical Outlook:

• Daily Bias: Bullish
• Support: 4,334
• Resistance: 4,400

Oil:

Key takeaway:

• WTI fell 1.6% to $100.30 a barrel, while Brent declined 0.9% to $103.87.
• Markets assessed whether alternative export routes could offset the disruption to Saudi Arabia’s East-West pipeline.

Technical Outlook:

• Daily Bias: Bearish
• Support: 91.84
• Resistance: 102.42

Calendar Watch:

• US: Fed Goolsbee Speaks: Markets will monitor comments from Fed official Austan Goolsbee for further clues on the monetary-policy outlook.
• US: Chicago Fed National Activity Index (August): An indicator of US economic activity, offering insight into growth conditions.
• Eurozone: ECB President Lagarde Speaks: Markets will monitor Christine Lagarde’s remarks for further guidance on the ECB’s policy outlook.

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