Crude oil declined as escalating trade tensions weakened demand for risk assets, while the International Energy Agency raised its forecast for crude oil surplus, expecting record-breaking excess supply. Base metals fell broadly, with zinc posting its largest decline in nearly eight months. Gold prices rose amid lingering trade uncertainties.

Oil: WTI Falls to Five-Month Low Affected by Supply Surplus Forecasts

Crude oil declined as escalating trade tensions weakened demand for risk assets, while the International Energy Agency (IEA) raised its forecast for crude oil surplus, expecting record-breaking excess supply.

WTI fell 1.3% on Tuesday, settling at approximately $59 per barrel, reaching its lowest level since May, while Brent crude approached $62 per barrel.

The Paris-based International Energy Agency on Tuesday raised its forecast for global crude oil supply surplus in 2026, expecting unprecedented excess supply. The agency stated that next year's global daily crude oil supply will exceed demand by nearly 4 million barrels, which would be unprecedented on an annual scale.

On the same day, Federal Reserve Chairman Powell's comments reinforced market expectations that officials might cut rates in October amid continued labor market weakness.

"Oil prices achieved an intraday low rebound today due to Powell's dovish comments on quantitative easing causing a shift in risk appetite," said Frank Monkam, macro trading director at Buffalo Bayou Commodities. Nevertheless, with oil market fundamentals remaining bearish, he noted that "if the rebound continues, the $60-62 range could constitute strong resistance for WTI."

Several executives from major oil trading companies in London said they expect oil prices to fall further. Trafigura's global crude oil head Ben Luckock warned that the long-expected oil market oversupply is imminent, while Gunvor CEO Torbjorn Tornqvist noted that gasoline and diesel demand may have peaked.

Crude oil prices fell in both August and September, with WTI down approximately 19% year-to-date.

WTI November crude futures fell 1.3%, settling at $58.70 per barrel;

Brent December crude futures settled down 1.5% at $62.39 per barrel.

Base Metals: Broad Decline

Base metals fell broadly, with zinc posting its largest decline in nearly eight months.

At close, LME copper futures fell 2.24% to $10,578.0 per ton;

LME aluminum futures fell 0.92% to $2,737.5 per ton;

LME nickel futures fell 0.47% to $15,135.0 per ton;

LME zinc futures fell 2.63% to $2,941.5 per ton.

Precious Metals: Gold Prices Rise

Gold prices rose amid lingering trade uncertainties.

Powell hinted that the Federal Reserve may still cut rates by another 25 basis points later this month, and falling interest rates typically benefit gold, a non-yielding precious metal.

Societe Generale analysts said gold prices are expected to explore $5,000, driven by ETF fund flows and central bank purchases.

As of 6:18 PM New York time, COMEX gold futures rose 0.73% to $4,138.7 per ounce;

COMEX silver futures rose 0.38% to $50.622 per ounce.