Oil rises 1% after the Fed keeps rates unchanged. Following the U.S. Federal Reserve’s decision to keep benchmark interest rates, risk appetite returned to the financial markets on Thursday, causing oil to recover 1% of its three-day loss.
By 06:57 GMT, U.S. West Texas Intermediate crude futures had gained 83 cents, or 1%, to $81.27 a barrel, while Brent crude futures had increased by 82 cents, or 1%, to $85.45 a barrel. In the prior session, both benchmarks reached their multi-week lows.
The increase in oil prices coincides with increases in other financial assets following the Fed’s decision on Wednesday to maintain its benchmark interest rate at 5.25%–5.50%.
Whether financial conditions are already tight enough to manage inflation or if further constraint is necessary for an economy to outperform forecasts was confusing for policymakers.
“The Fed is expected to pause in December again, leaving the door open for more rises if needed… According to a report from Global X ETFs’ chief investment officer, Jon Maier, this would possibly stabilize the risk-off swings that have been occurring over the last several months. Additionally, investors are watching events in the Middle East, which has alarmed them since a more significant conflict may affect the region’s oil supply.
According to state media, Iran’s Supreme Leader, Ayatollah Ali Khamenei, demanded that Muslim countries stop exporting food and energy to Israel and stop its shelling of the Gaza Strip.
According to U.S. energy data, Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), produced around 2.5 million barrels of crude oil daily in 2022. Investors anticipated a meeting of the Bank of England on Thursday. According to a Eurostat flash estimate, October inflation in the eurozone was at its lowest point in two years. This supports the theory that interest rate hikes by the European Central Bank are unlikely to occur anytime soon.
The average global oil demand in October, according to J.P. Morgan analysts, was 102.1 million barrels per day (bpd), which was around 100,000 bpd less than their initial forecast for the same month. According to data released by the U.S. Energy Information Administration (EIA), refiners undergoing seasonal maintenance restarted units more slowly than anticipated, increasing the nation’s crude stockpiles.
The EIA said that although refining runs were down, U.S. gasoline stockpiles (USOILG=ECI) increased by 0.1 million barrels over the week to 223.5 million.
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