Oil Prices Rise as Fed Rate Cut Fuels Optimism
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 advanced as risk-on sentiment swept across wider financial markets following the steep interest-rate cut by the Federal Reserve.
West Texas Intermediate rose to settle just shy of $72 a barrel, while Brent futures climbed to settle close to $75 a barrel. Equities rallied across the globe as the Fed’s move reinforced expectations that the US economy will avoid a downturn.
“In the oil market, the softer monetary policy outlook has fostered expectations of stronger future demand, supporting a more likely bullish outlook for crude prices further out,” SEB analyst Ole Hvalbye said in a note. “The move, driven by progress in managing inflation, reflects the Fed’s shift in focus towards supporting the labor market and the broader economy.”
Oil Prices:
- WTI for October delivery climbed 1.5% to settle at $71.95 a barrel.
- Brent for November settlement rose 1.7% to settle at $74.88 a barrel.
Investors are also closely watching developments in the Middle East after Israeli Defense Minister Yoav Gallant declared what he called a “new phase” in the war with regional Islamist groups. That has raised fears about a wider conflict that could involve Iran, an OPEC producer.
WTI is still on track for a quarterly loss on concerns over China’s economic slowdown and ample supply. Adding to the bearish outlook, a measure of US gasoline demand fell further below 9 million barrels a day while jet fuel consumption ebbed for a third straight week, according to government data.
Meanwhile, US fuelmakers are getting ready to carry out the lightest preventive maintenance season in three years, which may help soak up excess supplies of crude, supporting oil prices that earlier this month touched the lowest in more than a year.
Shrinking US inventories could also underpin further price gains. Crude stockpiles at the key storage hub at Cushing, Oklahoma, are significantly lower than the five-year seasonal average and close to what’s considered “tank bottom” levels.
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