Oil set for weekly gain after Fed cut

September 20, 2024 (MLN): Oil steadied on Friday but remained on track for the biggest weekly gain since February following a jumbo interest-rate cut by the Federal Reserve.

Brent crude traded near $74.61 per barrel and is up almost 4% this week.

While West Texas Intermediate crude (WTI) was at $70.91 per barrel.

Optimism that the Fed can engineer a soft landing for the US economy has driven a risk-on tone across broader financial and commodity markets, Bloomberg reported.

A series of walkie-talkie and pager explosions this week in Lebanon has raised fears of a full-blown war between Tehran-backed Hezbollah and Israel.

There are concerns that a wider conflict could involve Iran and threaten crude flows from the region.

Crude’s weekly gain comes after the global Brent benchmark sank below $70 last week amid anxiety about weak demand, particularly in top importer China.

The Fed’s move to start cutting rates now provides room for Beijing to offer more monetary and fiscal stimulus, according to a report in Securities Times.

“The softer outlook in US monetary policy and the Fed’s willingness to shore up the economy at a time when inflation looks under control have helped stage a risk-on move in financial markets,” analysts at consultant FGE wrote in a note.

US fuelmakers are getting set for the lightest maintenance season in three years, according to market intelligence firm IIR Energy, easing some concerns about oil supplies backing up.

Refineries plan to take about 529,000 barrels of daily capacity offline during the fall.

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