Oil Soars on Supply Worries, Gold Tumbles on Rate Hike Expectations

Oil prices are rising due to supply concerns following weekend attacks in the Middle East. The price of West Texas Intermediate (WTI) oil is up at $103, while Brent crude is trading at $107.

The Houthi rebels attacked Saudi Arabia over the weekend, disrupting its east-west pipeline and affecting 4% of global supply. The Strait of Hormuz has seen extremely low levels of vessel traffic, adding to worries about supply disruptions.

As a result, U.S. diesel prices have crossed $6 per gallon for the first time last week, with Commerce Bank raising its year-end diesel forecast to $1,200 per tonne from $950.

In related news, gold prices are falling due to rising expectations of a Federal Reserve rate hike. The market now sees an 86.5% chance of a 25-basis-point rate hike, up from 65% before the inflation data was released.