Oil prices rose early on Thursday in Asian trade, extending the gains from Wednesday, after the Fed signaled there could be three rate cuts coming next year that could boost economic growth and oil demand.Early on Thursday, the U.S. benchmark WTI Crude was trading up by 1.77% on the day at $70.70. The international benchmark, Brent Crude, traded 1.80% higher at $75.60.
Oil prices, which earlier this week had fallen to their lowest levels since June, extended Wednesday’s gains into Thursday, after the U.S. Federal Reserve kept interest rates unchanged on Wednesday, signaling strongly that there will be a less hawkish stance next year, with the potential for three rate cuts across 2024.The Fed’s comments on Wednesday triggered a rally in stocks, bonds, and gold, and sent the U.S. dollar to a four-month low.
A cheaper greenback makes oil cheaper for buyers holding currencies other than U.S. dollars, so the dollar slump typically boosts oil prices.Following the comments from Chair Jerome Powell that the Fed doesn’t need a recession to start cutting interest rates next year, the Dow Jones index surged to a new record high.“Crude oil prices rebounded before the Fed meeting, and the event lifted them further,” Tina Teng, a market analyst at CMC Markets, said in a note.
“The price was initially boosted by a larger-than-expected draw of the US inventory,” Teng added.Earlier on Wednesday, crude oil prices reversed their decline, after the U.S. Energy Information Administration (EIA) reported an estimated inventory draw of 4.3 million barrels for the week to December 8.Also on Wednesday, OPEC kept unchanged its oil demand growth forecasts for this year and next, citing better-than-expected economic performance so far this year and blaming “exaggerated concerns about oil demand growth” for the recent slump in oil prices.
Source: https://oilprice.com