Oil is set for its largest weekly increase since February following a significant interest rate cut by the Federal Reserve, while traders remain alert to escalating tensions in the Middle East.
Brent traded below $75 a barrel on Friday, with futures more than 4% higher for the week, while West Texas Intermediate was near $72, News.Az reports, citing Bloomberg.Optimism the Fed can engineer a soft landing for the US economy has sparked a risk-on tone across broader financial and commodity markets.
A series of walkie-talkie and pager explosions this week has raised fears of a full-blown war between Iranian-backed Hezbollah and Israel, which neither confirmed or denied responsibility for the attacks. There are concerns that a wider conflict could involve Iran and threaten crude flows from the region.
Oil is still heading for a quarterly loss as signs of ample supply and China’s economic slowdown weigh on the market. The Fed move to start cutting rates has provided room for the Asian nation to provide more monetary and fiscal stimulus, according to a report from Securities Times.
“It remains to be seen whether the Fed’s interest-rate cut will mitigate downward risks for oil on the macro level,” said Gao Jian, an analyst at Qisheng Futures Co. “Fundamentals remain bearish and the market should stay vigilant about risks that are still skewed to the downside.”
US fuelmakers are getting ready to carry out the lightest maintenance season in three years, according to market intelligence firm IIR Energy, easing some concerns about oil supplies backing up. Refineries are planning to take about 529,000 barrels of daily capacity offline during the fall.
