Oil prices gain 2 Percent on hopes of a US Fed rate cut next month

Oil prices gain 2 Percent on hopes of a US Fed rate cut next month/Reuters

Reuters | August 22, 2024 | 11:37 PM IST | Breaking News | Follow on Google News

Oil prices gain 2 Percent on hopes of a US Fed rate cut next month

Oil prices gain 2 Percent on hopes of a US Fed rate cut next month

Aug 22 (Reuters) – Oil prices rose on Thursday, as expectations for a U.S. interest rate cut in a few weeks fueled a rebound after four days of price declines.

Brent crude futures gained $1.55, or 2.04%, to $77.6 a barrel by 1:20 p.m. EDT (1720 GMT). U.S. West Texas Intermediate crude futures rose $1.52, or 2.11%, to $73.45.

On Wednesday, minutes of the Federal Reserve’s July meeting showed most Fed officials thought the central bank was on track for an interest rate cut next month.

“The likelihood of a rate cut went up this morning,” said Bob Yawger, director of energy futures at Mizuho, adding that lower rates decrease the cost of borrowing and can create demand for crude.

On Thursday, the U.S. Labor Department said the number of jobless claims ticked up last week, but appeared to be steadying near a level consistent with gradual cooling of the labor market. This set the stage for interest rate cuts.

Also supporting oil prices, a U.S. government report on Wednesday showed crude, gasoline and distillate inventories fell by more than expected last week, a sign of demand picking up.

In the Middle East, Iran-aligned Houthi militants continued attacks on international shipping in solidarity with Palestinians in the war between Israel and Hamas.

A Greek-flagged oil tanker carrying 150,000 tonnes of crude that was evacuated by its crew after being attacked in the Red Sea now poses an environmental hazard, the EU’s Red Sea naval mission “Aspides” said on Thursday.

Investors are watching OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, which may reconsider its plan to gradually unwind some output cuts in October.

OPEC+ has said the plan to raise output could be paused or reversed if needed.

Reuters