“Oil Prices Hold Steady as Investors Await Fed Decision”

By Yuka Obayashi

In the ever-changing world of oil markets, prices have steadied as investors eagerly anticipate the U.S. Federal Reserve’s potential interest rate cut. The recent rise in oil prices can also be attributed to the looming threat of more violence in the Middle East, keeping the market on its toes.

Oil futures for November saw a slight drop of 3 cents to $73.67 a barrel, while October futures slid 11 cents to $71.08 a barrel. Both contracts saw gains of about $1 a barrel on Tuesday, fueled by supply disruptions in the U.S. post-Hurricane Francine and speculation of increased demand following potential interest rate cuts by the Fed.

The market is also keeping a close eye on the Middle East, where tensions are escalating. The recent alleged attack by Israel on militant group Hezbollah in Lebanon has raised concerns about possible output disruptions in the region.

Analyst Mitsuru Muraishi from Fujitomi Securities noted, “Markets have calmed down as concerns over hurricane damage and escalating tensions in the Middle East have been factored in. Now, investors are focusing on the Fed’s rate cuts which could revitalise U.S. fuel demand and weaken the dollar.”

Traders are betting on the Fed to kick off a series of interest rate cuts, with expectations of a half-percentage-point decrease on Wednesday. The pressure is on central bankers to deliver on these expectations.

Amidst all this, the market is also finding support from the expectation of U.S. oil purchases for the Strategic Petroleum Reserve (SPR). The Biden administration plans to acquire up to 6 million barrels of oil for the SPR, matching its largest purchase yet.

While the U.S. oil inventory data released by the American Petroleum Institute (API) was mixed, analysts are anticipating a decrease in crude inventories. The U.S. Energy Information Administration’s report is eagerly awaited to get a clearer picture of the oil market scenario.