NEW YORK, Sept 19 (Askume) – Oil prices rose 2% on Thursday after the Federal Reserve cut interest rates, helping global benchmark Brent crude recover from its lowest level in nearly three years last week.
Brent crude futures hit $75.09 a barrel by 12:19 a.m. ET (1619 GMT), up $1.44, or 2%, and recovering from last week’s low of $69 a barrel. U.S. crude oil prices rose $1.53, or 2.1%, to $72.44 a barrel.
The US central bank cut interest rates by half a percentage point on Wednesday . Rate cuts typically boost economic activity and energy demand, but markets also view it as a sign of weakness in the US labor market that could lead to an economic slowdown.
“While the 50 basis point rate cut signals tough economic challenges ahead, bearish investors remain unconvinced after the Fed raised its medium-term interest rate outlook,” ANZ Bank analysts said in a report.
The Bank of England kept interest rates steady at 5.0% on Thursday .
Rising tensions in the Middle East also boosted crude oil prices, said Tim Snyder, chief economist at Matador Economics.
A walkie-talkie used by the Lebanese armed group Hezbollah exploded on Wednesday , a day after a similar blast involving a pager. Security sources said Israel’s spy agency Mossad was responsible, but Israeli officials have not commented on the attack.
Alex Hodes, oil analyst at brokerage StoneX, said weak demand due to China’s economic slowdown was limiting oil’s gains.
Statistics bureau data over the weekend showed China’s refinery output fell for a fifth consecutive month in August. China’s industrial output growth also fell to a five-month low last month, while retail sales and new home prices fell further.
Citi analysts said they expected production in the off-season oil market to fall by about 400,000 barrels per day next quarter to keep Brent crude prices in the $70 to $75 per barrel range, but this would be temporary.
“With the global oil balance worsening in 2025 in most scenarios, we still expect oil prices to weaken again in 2025, with Brent reaching $60 a barrel,” Citi said in a report on Thursday.
