2023-11-02 11:24:56
Oil rose on Thursday following the Fed’s monetary policy decision the day before to keep interest rates unchanged, which might favor demand for crude oil in the United States by sparing the economy.
Around 11:10 a.m. GMT (12:10 p.m. in Paris), a barrel of Brent from the North Sea for delivery in January rose 1.39%, to $85.81.
Its American equivalent, a barrel of West Texas Intermediate (WTI) for delivery in December, gained 1.49% to $81.64.
“The market is rebounding (…) due to the decision of the Fed (American Federal Reserve, editor’s note) not to increase the country’s interest rates this time,” comment analysts at Energi Danmark.
At the end of the meeting of its monetary committee on Wednesday, the Fed in fact maintained the status quo on its key interest rates for the second time in a row, a decision expected by the markets.
This is the third time, in the last four meetings, that the monetary institution has not touched its rates. She wants to avoid slowing down economic activity too much, so as not to cause a recession.
The demand for crude oil from consuming countries is linked to their growth. However, increases in interest rates with the aim of extinguishing the surge in inflation tend to weigh on the economy.
The fact that “the Fed has suggested that it may have finished raising interest rates” might thus be favorable to demand in the world’s largest oil-consuming country, explain DNB analysts.
The day before, however, WTI hit $80.30 per barrel, its lowest price in more than two months.
For Tamas Varga, from PVM, “the world’s largest economy remains resilient”, and “a strong economy (may imply further rate increases).
The analyst therefore affirms that “the conviction that a further increase in rates remains plausible was (first) strengthened and sellers took the upper hand” on Wednesday, before giving way to another scenario: “there is still “We have a long way to go to reach the 2% (inflation) target, but monetary tightening has been effective and further rate hikes would likely do more harm than good.”
At the same time, for John Plassard, analyst at Mirabaud, if investors are still monitoring the situation in the Middle East, fears that the war between Israel and Hamas might “have repercussions on a larger scale”, and therefore consequences “on crude oil supply” are decreasing.
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