Oil Rallies as U.S Job Data Fuels Fed Rates Cut Expectation
Prices of crude oil increased on Wednesday as weak U.S. job data continued to fuel expectations that the Federal Reserve will maintain a dovish stance. Oil prices surge was also bolstered by the OPEC+ group’s cautious production at the time the EU and G7 extended sanctions on Russian crude oil exports.
The geological tensions in the Middle East and the Russia-Ukraine war heightened supply risks amidst uncertainties around global demand in 2025. OPEC+ members’ plan to increase output has been projected to raise aggregate supply.
Brent crude was trading at $65.88 per barrel, up 0.5% from the previous close of $65.55. US benchmark West Texas Intermediate (WTI) increased by 0.5% to $62.03 from $61.74 in the prior session.
Prices continued to gain support from the cautious production policy adopted by members of the OPEC+ group during their Oct. 5 online meeting. Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman confirmed plans to raise production by 137,000 barrels per day in November, in line with expectations.
The decision was seen as a measured step to maintain market stability while gradually reclaiming market share. It also helped ease lingering oversupply concerns, lending additional support to prices.
Analysts said ongoing efforts to curb Russian oil flows prompted some investors to take positions on expectations of higher prices, further underpinning the market.
Meanwhile, signs of weakness in the US labor market reinforced dovish expectations for the Fed, helping to sustain risk appetite in global markets.
Analysts said last week’s private-sector employment figures strengthened the case for potential rate cuts, but noted that the lack of upcoming inflation data could add uncertainty to the Fed’s policy trajectory.
Lower rates are expected to boost growth and lift demand in oil-reliant sectors, supporting prices, analysts said. However, on the demand side, data pointing to rising US crude inventories signaled a potential slowdown.
The American Petroleum Institute (API) estimated that US commercial crude stocks rose by 2.78 million barrels last week compared to the previous week, indicating weak demand and putting downward pressure on prices.
The US Energy Information Administration (EIA) is scheduled to release official inventory data later in the day.
