Oil Rises as U.S Fed Rates Cut Boosts Sentiment
Oil prices rose in the global commodities market on Thursday as the U.S. Federal Reserve’s fund rates cut boosted expectations that demand would increase.
The market anticipates that pressures on energy costs will reduce due to monetary policy easing and a weak U.S. dollar. Latest data from the U.S. energy agency showed the inventories fell strong, suggesting imports of more crude from the world’s largest crude consumer.
Brent climbed to $72.64 per barrel while the US benchmark West Texas Intermediate also increased to $69.49 per barrel.
The US Federal Reserve on Wednesday cut the benchmark policy rate by 25 basis points to the range of 4.25%-4.50%, as widely expected. Increased economic activity spurred by lower interest rates is anticipated to further boost oil demand and in turn support higher oil prices.
While the economy continues to grow at a steady pace, labor market conditions have eased. Unemployment, while still low, has ticked up slightly, the bank said in a statement.
Future rate adjustments will depend on incoming data and evolving economic conditions, it added. During his speech following the bank’s decision, Federal Reserve Chair Jerome Powell said that for 2025, the bank will be ‘more cautious’ in deciding future interest rate cuts.
‘We have reduced our policy rate by a total of 100 basis points from its peak level and our policy stance is now significantly less restrictive. We may therefore be more cautious when considering further adjustments to our policy rate,’ Powell said.
Analysts look to today’s growth data and Friday’s core personal consumption expenditures price index data for further cues on economic growth in the US.
The US Energy Information Administration (EIA) reported a drawdown in US commercial crude oil inventories for the week ending Dec. 13, bolstering oil price increase.
US commercial crude oil inventories decreased by 900,000 barrels to 421 million barrels, according to data released by the EIA late Wednesday. The drop in stocks suggests strengthening demand in the US, the world’s largest oil consumer. #Oil Rises as U.S Fed Rates Cut Boosts Sentiment Afreximbank Closes $282m India-Focused Club Deal
