Oil prices rose by 2% on Thursday, buoyed by the Federal Reserve’s decision to make a significant cut to U.S. interest rates, aiding a recovery in global benchmark Brent crude from its lowest point in nearly three years.
Brent crude futures increased to $75.09 per barrel by 12:19 PM ET (1619 GMT), marking a $1.44 gain, or 2%, after dipping below $69 per barrel last week. U.S. crude also saw a rise, climbing $1.53, or 2.1%, to reach $72.44 per barrel.
The Federal Reserve’s half-percentage-point rate cut on Wednesday signaled a potential boost to economic activity and energy demand, a typical outcome of lower interest rates. However, the move was also seen as a response to concerns about a weakening U.S. labor market, which could slow economic growth.
“While the 50 basis point cut hints at harsh economic headwinds ahead, bearish investors were left unsatisfied after the Fed raised the medium-term outlook for rates,” analysts from ANZ noted in a report.
Additional upward pressure on oil prices came from escalating tensions in the Middle East, according to Tim Snyder, chief economist at Matador Economics. Despite this, weak demand from China’s slowing economy continues to limit gains in oil prices, said Alex Hodes, an oil analyst at brokerage StoneX.
The recent shifts in oil prices reflect a broader uncertainty in global markets, with conflicting factors such as U.S. monetary policy adjustments, geopolitical tensions, and fluctuating energy demand in major economies like China shaping the outlook for crude in the near future.
