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Oil prices rose 2% today, after a major cut in US interest rates, sending Brent crude up from its lowest levels in nearly three years, which it recorded last week.
Brent crude futures for November delivery rose $1.44, or 2 percent, to $75.09 a barrel by 16:19 GMT, while West Texas Intermediate crude futures for October delivery rose $1.53, or 2.1 percent, to $72.44 a barrel.
The US Federal Reserve cut interest rates by half a percentage point on Wednesday. Lower interest rates usually boost economic activity and increase demand for energy, but the market took the cut as a sign of tight labor markets, which could slow the economy.
“While the 50bp rate cut signals significant economic challenges ahead, bearish investors were not satisfied after the Fed raised its medium-term rate forecasts,” analysts at ANZ said in a note.
The Bank of England left interest rates unchanged at 5 percent on Thursday.
Markets are awaiting developments in the Middle East after the explosion of wireless communication devices used by the Lebanese Hezbollah group, yesterday, Wednesday, a day after similar explosions of wireless communication devices (pagers).
Security sources said that the Israeli intelligence agency (Mossad) was responsible for them, but Israeli officials did not comment on the explosions.
China’s refinery output fell for a fifth straight month in August, data from the country’s statistics bureau showed. China’s industrial output growth slowed to a five-month low last month, and retail sales and new home prices continued to fall.
Analysts at Citibank say they expect an oil market deficit of about 0.4 million barrels per day to support Brent crude prices in the $70-$75 per barrel range over the next quarter, but that will be temporary.
