Thu Sep 19 04:15:49 UTC 2024: ## Oil Prices Surge on Fed Rate Cut, Middle East Tensions Rise

**New York** – Oil prices climbed on Tuesday, boosted by a risk-on sentiment sweeping financial markets following the Federal Reserve’s surprise interest rate cut. West Texas Intermediate (WTI) closed just under $72 a barrel, while Brent futures settled near $75.

The Fed’s move, driven by progress in managing inflation, reinforced expectations of a resilient US economy and increased demand for oil in the future. “The softer monetary policy outlook has fostered expectations of stronger future demand,” said Ole Hvalbye, analyst at SEB.

However, the Middle East remains a source of volatility. Israeli Defense Minister Yoav Gallant declared a “new phase” in the war with regional Islamist groups, raising concerns about a wider conflict involving Iran, a major oil producer.

While oil prices are up for the day, WTI is still on track for a quarterly loss. Concerns over China’s economic slowdown and ample oil supply continue to weigh on the market. US gasoline demand remains below 9 million barrels a day, and jet fuel consumption has declined for three consecutive weeks.

Despite these bearish factors, there are signs of a tightening oil market. US fuelmakers are gearing up for their lightest preventive maintenance season in three years, which could help absorb excess crude supply. Additionally, crude inventories at the key storage hub in Cushing, Oklahoma, are significantly lower than seasonal averages, approaching “tank bottom” levels.

The combination of increased demand and shrinking inventories could further support oil prices in the coming weeks.

Read More