Oil Set for Weekly Gain After Fed Cut as Focus Shifts to Mideast

By Bloomberg

Sep 20, 2024

image is BloomburgMedia_SK1TTBT0G1KW00_20-09-2024_10-33-44_638623872000000000.jpg

A flame rises from a chimney a PT Pertamina facility at the port city of Balikpapan in East Kalimantan, Borneo, Indonesia, on Wednesday, Nov. 27, 2019. For Jakarta, a city on the island of Java saddled with some of the worst superlatives in the region⁠—most polluted, most congested, fastest sinking⁠—the floods were an old story, the third time deluges have killed dozens since 2007. The problems have become so overwhelming that, even before the latest catastrophe, President Joko Widodo had decided to build a new capital 1,200 kilometers away on the island of Borneo. Photographer: Dimas Ardian/Bloomberg

(Bloomberg) -- Oil was on track for the biggest weekly advance since February following a steep interest-rate cut by the Federal Reserve, while traders continued to monitor tensions in the Middle East.

Brent traded near $75 a barrel Friday, with futures more than 4% higher for the week, while West Texas Intermediate was below $72. 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.

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 provide more monetary and fiscal stimulus, according to a report from 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.

By Bloomberg News