Oil prices surged by 1% on Thursday, effectively snapping a three-day decline. This increase in oil prices came as risk appetite made a comeback in financial markets following the U.S. Federal Reserve’s decision to keep benchmark interest rates on hold.
Brent crude futures saw a notable rise of $1.23, equivalent to 1.5%, reaching a price of $85.88 per barrel. Simultaneously, U.S. West Texas Intermediate crude futures gained $1.25, or 1.6%, settling at $81.69 per barrel.
The Federal Reserve’s choice to maintain its benchmark interest rate at the range of 5.25%-5.50% in its Wednesday meeting played a pivotal role in boosting oil prices. Policymakers faced the challenging task of gauging whether current financial conditions were already stringent enough to curb inflation, or if the thriving economy might necessitate further restraint.
U.S. inflation remained constant at 3.4% in September for the third consecutive month. Tamas Varga, an analyst at broker PVM, commented, “There is still some way to go to achieve the 2% target; nonetheless, monetary tightening has been working effectively, and additional rate increases would probably do more harm than good.”
Across the Atlantic, in Europe, manufacturing activity in the eurozone experienced a deepening contraction in October. The Purchasing Managers’ Index (PMI) fell by 0.3 points during the month, reaching a score of 43.1, signaling a contraction (scores below 50 indicate contraction).
The Bank of England is expected to keep interest rates steady in its meeting later today, which investors will be closely monitoring for further economic insights.
In the Middle East, ongoing developments are keeping oil markets on edge. Escalating conflict around Gaza City unfolded on Thursday as Israeli tanks and troops faced fierce resistance from Hamas
