Oil prices rebounded with a 1% gain, halting a three-day decline, as renewed risk appetite returned to financial markets following the U.S. Federal Reserve’s decision to maintain benchmark interest rates.
Brent crude futures surged by $1.03, or 1.22%, reaching $85.66 per barrel by 1149 GMT, while *U.S. West Texas Intermediate crude futures* climbed $1.02, or 1.27%, to $81.46 per barrel.
The surge in oil prices mirrored the positive response of financial assets to the Federal Reserve’s decision to leave its benchmark interest rate unchanged at 5.25%-5.50% during its latest meeting.
Callum Macpherson, Head of Commodities at Investec, noted, “Asset markets reacted positively to the Fed yesterday, and I think oil has followed suit by moving higher.”
Federal policymakers grappled with the question of whether financial conditions were already tight enough to control inflation or if an economy that consistently outperformed expectations might require more restraint.
U.S. inflation held steady at 3.4% in September for the third consecutive month. Tamas Varga, an analyst at broker PVM, stated, “There is still some way to go to achieve the 2% target; nonetheless, monetary tightening has been effective, and an additional rate increase might do more harm than good.”
In contrast, in Europe, the manufacturing activity in the Eurozone contracted further in October, with the Purchasing Managers’ Index (PMI) falling by 0.3 points to 43.1, signaling contraction with a score below 50. Later on Thursday, the Bank of England is expected to maintain interest rates.
Additionally, market observers are keeping a close watch on developments in the Middle East, where ongoing tensions could potentially disrupt oil supplies in the region.
As fighting continued around Gaza City, advancing Israeli forces faced strong resistance from Hamas militants. The situation in the Middle East remains a key factor influencing oil market dynamics.
