U.S. Crude Rises 1%, Closes Above $71 on Fed Rate Cut Optimism

September 18, 2024: Crude oil prices experienced a significant uptick on Wednesday, closing above $71 per barrel. This increase was primarily driven by growing optimism that the Federal Reserve would implement a rate cut at its upcoming policy meeting.

Recent economic data suggest a potential slowdown in the U.S. economy, fueling the market’s expectations for a rate cut. Concerns about a recession have led investors to anticipate that the Fed will ease monetary policy to stimulate growth and prevent a more severe economic downturn.

A rate cut would lower borrowing costs, making it cheaper for businesses to invest and for consumers to spend. This, in turn, could lead to increased demand for energy, including crude oil. A rate cut could also weaken the U.S. dollar, making crude oil more affordable for foreign currency buyers.

While the potential for a rate cut provided a strong tailwind for oil prices, other factors also contributed to the increase. These included geopolitical tensions in the Middle East and concerns about supply disruptions.

As of September 19, 2024, West Texas Intermediate (WTI) crude oil is trading above $71 per barrel. The market will closely watch the Fed’s upcoming policy announcement to see if the central bank’s decision aligns with current expectations.

Also Read, Bitcoin Surges Past $60K Ahead of Fed Rate Decision