- WTI crude oil prices are rising, but the overall market reaction has been relatively subdued following the Fed's rate cut.
- The Federal Open Market Committee lowered the federal funds rate to a range of 4.75% to 5.0%.
- US Crude Oil Stocks Change fell by 1.63 million barrels last week, significantly more than the anticipated draw of 0.1 million barrels.
West Texas Intermediate (WTI) oil prices have recovered from recent losses, trading around $69.50 per barrel during Thursday's Asian session. The US Federal Reserve’s decision to cut interest rates by 50 basis points, more than expected, has supported oil prices, although the overall market reaction has been relatively muted.
ANZ analysts noted in a Reuters report, “The 50 basis point cut indicates significant economic challenges ahead, but bearish investors were disappointed as the Fed also raised its medium-term rate outlook.”
The Federal Open Market Committee (FOMC) reduced the federal funds rate to a range of 4.75% to 5.0%, marking the Fed’s first rate cut in over four years. This move underscores the Fed’s commitment to protecting the labor market and preventing a recession. Lower borrowing costs could bolster economic growth in the United States, the world’s largest crude consumer, potentially supporting oil demand.
Fed Chair Jerome Powell stated in a press conference following the meeting, “This decision reflects our increased confidence that, with the right adjustments to our policy approach, we can maintain a strong labor market while achieving moderate economic growth and bringing inflation down to a sustainable 2% level.”
Additionally, WTI oil prices may have found support from the US Energy Information Administration (EIA) report, which showed a larger-than-expected decline in Crude Oil Stocks. Stocks fell by 1.63 million barrels to 417.5 million, well above the forecasted 0.1 million-barrel draw for the week ending September 13, reversing a previous increase of 0.833 million barrels.
