NYC: Following the Federal Reserve’s significant reduction in US interest rates, oil prices increased by 2% on Thursday. This helped global benchmark Brent crude rebound from its lowest point in over three years, which it reached last week.
By 12:19 PM ET (1619 GMT), Brent futures had increased by $1.44, or 2 percent, to $75.09 per barrel, recovering from levels below $69 per barrel the previous week. US oil increased by $1.53, or 2.1 percent, to $72.44 a barrel.
On Wednesday, the US Federal Reserve lowered interest rates by 0.5 percentage points. Interest rate reductions often increase demand for energy and economic activity, but they were also interpreted by the market as an indication of a contracting US labor market, which might impede the economy.
ANZ analysts wrote in a note that “bearish investors were left unsatisfied after the Fed raised the medium-term outlook for rates, even though the 50 basis point cut hints at harsh economic headwinds ahead.”
Additionally driving up petroleum prices were growing tensions in the Middle East, according to Tim Snyder, chief economist at Matador Economics.
Oil’s gains were being restricted by weak demand stemming from China’s faltering economy, according to brokerage StoneX’s oil analyst, Alex Hodes.
