Oil rises nearly 3% after Fed and BoE leave interest rates unchanged

A view shows the Kozmino crude oil terminal on the shore of Nakhodka Bay near the port city of Nakhodka, Russia, August 12, 2022. REUTERS/Tatiana Meel/Flee/File Photo Acquire License Rights

• Oil futures trading nearly 3% higher on Thursday
• The Bank of England is keeping interest rates stable
• The US Federal Reserve also kept interest rates unchanged on Wednesday
• Israeli forces are fighting against Hamas around Gaza City

BENGALURU, Nov 2 (Reuters) – Oil prices rose more than $2 a barrel on Thursday, set to break a three-day downward trend as risk appetite returned in financial markets after the U.S. Federal Reserve kept interest rates on hold.

Brent crude futures rose $2.29, or 2.7%, to $86.92 a barrel at 1:39 p.m. EDT [1739 GMT]while U.S. West Texas Intermediate crude futures rose $2.23, or 2.8%, to $82.67 a barrel.

U.S. policymakers struggled at a two-day policy meeting this week to determine whether financial conditions might already be tight enough to control inflation or whether an economy that continues to outperform expectations might do so even more Restraint needed. Ultimately, the Fed left its key interest rate unchanged at 5.25% to 5.50% at its last meeting on Wednesday.

Oil investors have been closely following the Federal Reserve’s policy decisions, concerned that aggressive interest rate hikes could slow the economy and dampen energy demand.

“If the Fed dismisses the crisis, the bottom for oil may soon be reached,” said Phil Flynn, an analyst at Price Futures Group.

The Bank of England held interest rates at a 15-year high of 5.25% at its last meeting on Thursday, the second straight month of stable interest rates after 14 consecutive rate hikes.

She also emphasized that she does not expect interest rate cuts in the foreseeable future.

“However, at this point it seems clear that the BoE, like many of its peers, is done with the tightening cycle and the important thing now is how long it stays at the peak,” said Craig Erlam, analyst at OANDA.

On the supply side, top oil exporter Saudi Arabia is expected to reconfirm an extension of its voluntary cut in oil production by 1 million barrels a day through December, analysts told Reuters on Thursday.

Investors will also be paying attention to developments in the Middle East, which have kept oil markets on edge as a major conflict could disrupt supplies in the region.

Fighting raged around Gaza City on Thursday as advancing Israeli tanks and troops encountered stiff resistance from Hamas fighters.

Reporting by Shariq Khan, Laura Sanicola, Robert Harvey, Stephanie Kelly and Muyu Xu; Edited by Robert Birsel, Jan Harvey and David Evans

Our standards: The Thomson Reuters Trust Principles.

Purchase license rightsopens new tab

Shariq covers energy markets with a focus on U.S. physical refined products and global oil financial markets. He regularly contributes to energy mergers and acquisitions and corporate moves at leading shale oil companies, including oil majors and leading oil-focused private equity firms. He was nominated for the 2020 Reuters Journalist of the Year award for his exclusive reporting on mass layoffs and bankruptcies in the shale region during the height of the COVID-19 pandemic. Shariq has a degree in journalism and has six years of experience in energy stocks and markets. Contact: 918884014512