Oil Prices Climb Ahead of U.S. Fed Rates Cut
Oil prices climbed in the global commodities market on Tuesday amidst expectation that U.S. Federal Reserves would lower rates. The demand expectation in China is boosting hope of a price surge while tensions continue to escalate in the Middle East.
In breach of the ceasefire agreement with Lebanon, Israel has continued assault in the Middle East, thus reinforcing supply concerns in the region. On Tuesday, Brent rose to $72.22 per barrel while the US benchmark West Texas Intermediate climbed to $68.38 per barrel.
Crude oil prices have been fluctuating ahead of the Organisation of Petroleum Exporting Countries (OPEC) and allied members (OPEC+) meeting this week. Due to the risk of a global glut, the markets expect the oil group to extend their output cuts instead of boosting production as previously planned.
Latest data in China raised expectations that economic activity in the country will improve amid continued support from Beijing. This week’s US employment data is expected to have an impact on the US Federal Reserve’s (Fed) interest rate decision.
Analysts anticipate that low interest rates will stimulate economic activity and increase oil demand in support of higher oil prices. According to the pricing in the money markets, there is a 75% probability that the Fed will make a 25 basis point reduction in the monetary policy during the bank’s meeting on Dec. 18.
Tension heightened in the Middle East as the Israeli army continues to attack targets despite a cease-fire agreement. The Israeli army announced Tuesday that it bombed dozens of missile platforms belonging to Hezbollah in Lebanon.
As a result of the attacks in the south of Lebanon, six days after the cease-fire agreement, 2 people, including a government official, died, and many people were injured.
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