Oil Climbs on Fed Rate Cut Hopes and Renewed Lebanon Tensions
by Bloomberg | Antonia Mufarech and Alex Longley
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil rose as expectations increased that the Federal Reserve will be more aggressive with its interest rate cuts and a series of deadly blasts in Lebanon reignited geopolitical tensions.
West Texas Intermediate jumped more than 1.5% to settle above $71 a barrel. Markets are implying a roughly 55% chance that the Fed opts for a steeper 50-basis-point rate cut on Wednesday, which could help stimulate energy demand. Crude extended its gains after Iran-backed Hezbollah accused Israel of orchestrating an attack that killed several people and left more than 2,700 wounded across Lebanon, increasing fears of an all-out war.
“The macro environment is supportive, providing a bid to risk assets ahead of the Fed meeting,” said Rebecca Babin, senior energy trader at CIBC Private Wealth. Crude also is benefitting from extreme short positioning, continued supply constraints in Libya and the US Gulf of Mexico and a potentially large drawdown in inventories at the key storage hub in Cushing, Oklahoma, this week, Babin said.
Crude remains down this quarter on China’s economic slowdown and signs of plentiful supply. EA Quant Analytics sees positioning of trend-following commodity trading advisers at close to their maximum short positions after a recent price slump, a setup that may ease selling pressure.
In Europe, some major oil refineries are cutting how much crude they process at their plants, adding to headwinds for prices. The region is also facing competition from a new plant in Nigeria, which is in the process of firing up.
Oil Prices:
- WTI for October delivery climbed 1.6% to settle at $71.19 a barrel.
- Brent for November settlement rose 1.3% to settle at $73.70 a barrel.
by Bloomberg | Antonia Mufarech and Alex Longley
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas