In the wake of the US Fed’s interest rate cut, oil prices rose as Brent crude hovered slightly below $75, the highest level since early this month but still in the low-end territory of this year due to expected low global demand.
Brent crude futures for November increased by 1.21% or 89 cents to $74.54 per barrel and WTI crude futures for October upped also by 1.13% or 80 cents to $71.71 per barrel.
Interest rate cut usually stimulates the economy and the subsequent energy demand. However, the market also viewed the cut as symptoms of a weak labor market and a hampered economy.
On top of that, China’s economy decelerating also yielded some effects: output from Chinese refineries also slowed for the fifth month, as well as its industrial output that is now at a five-month low while retail sales and new housings are further incapacitated.
Temporary counter-seasonal market deficit for oil is expected around 0.4 million bpd in support of Brent crude between $70 to $75 in the next quarter, anticipated the Citi analysts.
