Oil prices stabilise ahead of Fed interest rate decision

By Robert Harvey

LONDON (Reuters) -Oil prices stabilised on Monday as ongoing disruption to U.S. Gulf oil infrastructure balanced persistent demand concerns after a fresh round of Chinese data while investors await news on U.S. interest rates this week.

Brent crude futures for November were up 23 cents, or 0.32%, at $71.84 a barrel by 0934 GMT. U.S. crude futures for October were up 32 cents, or 0.47%, at $68.

The market is likely to remain cautious until the Federal Reserve makes its interest rate decision on Wednesday, said Phillip Nova analyst Priyanka Sachdeva, adding that prices are still supported by some supply worries given that some capacity remains offline in the Gulf of Mexico.

Traders are increasingly betting on rate cut of 50 basis points (bps) rather than 25 bps, as shown by the CME FedWatch tool that tracks fed fund futures.

Lower interest rates typically reduce the cost of borrowing, which can boost economic activity and lift demand for oil.

However, a cut of 50 bps could also signal weakness in the U.S. economy, which could raise concerns over oil demand, said OANDA analyst Kelvin Wong.

Nearly a fifth of crude oil production and 28% of natural gas output in the Gulf of Mexico remains offline in the aftermath of Hurricane Francine.

Weaker Chinese economic data released over the weekend dampened market sentiment, with the low-for-longer growth outlook in the world’s second-largest economy reinforcing doubts over oil demand, IG market strategist Yeap Jun Rong said in an email.

Industrial output growth in China, the world’s top oil importer, slowed to a five-month low in August while retail sales and new home prices weakened further.

Oil refinery output also fell for a fifth month as weak fuel demand and export margins curbed production.

Brent and WTI each gained about 1% last week but remain comfortably below their August averages of $78.88 and $75.43 a barrel respectively after a price slide around the start of this month driven in part by demand concerns.

This post is originally published on INVESTING.

  • Related Posts

    Mexico plans to set aside $6 billion for Pemex in draft budget, Bloomberg reports

    (Reuters) – Mexico plans to set aside about $6 billion from its 2025 draft budget for heavily indebted national oil company Pemex and would help its debt obligations next year,…

    US dollar and bitcoin advance spurred by Trump tariff expectations

    By Chibuike Oguh and Harry Robertson NEW YORK/LONDON (Reuters) -The U.S. dollar rose to a 6-1/2-month high against major peers on Tuesday, while bitcoin pared gains after earlier hitting a…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    Mexico plans to set aside $6 billion for Pemex in draft budget, Bloomberg reports

    • November 12, 2024
    Mexico plans to set aside $6 billion for Pemex in draft budget, Bloomberg reports

    US dollar and bitcoin advance spurred by Trump tariff expectations

    • November 12, 2024
    US dollar and bitcoin advance spurred by Trump tariff expectations

    Gold prices stumble as strong Treasury yields, dollar bite

    • November 12, 2024
    Gold prices stumble as strong Treasury yields, dollar bite

    US oil industry urges Trump to ditch Biden climate policies

    • November 12, 2024
    US oil industry urges Trump to ditch Biden climate policies

    Oil prices hold near 2-week low after OPEC cuts demand view, dollar rises

    • November 12, 2024
    Oil prices hold near 2-week low after OPEC cuts demand view, dollar rises

    Explainer-How methane emissions threaten climate goals

    • November 12, 2024
    Explainer-How methane emissions threaten climate goals