Oil Prices Jump on Rate Decision

• Oil Prices Jump on Rate Decision

Oil prices rose on Wednesday as the world awaits the U.S. Federal Reserve position on interest rates this week (today).

Experts are predicting that the central bank will cut rates for the first time in over a decade to stimulate growth and support the slowing economy.

The odds of the Federal Reserve lowering rates this week surged to a record-high on Tuesday, boosting demand expectations in the world’s largest oil user.

“Regarding the Fed, the market has priced in a 25 basis point cut for Wednesday,” Harry Tchilinguirian, global oil strategist at BNP Paribas in London, told the Reuters Global Oil Forum.

Also, a data from the American Petroleum Institute (API) reported a decline of 6.024 million barrels in US crude inventories for the week ended July 25, more than the 1.818 million barrels predicted by analysts.

All these, coupled with the expected trade talks between the U.S. and China bolstered oil prices as investors are projecting an increase in global demand.

“Crude oil moved higher today partly due to anticipation of another meaningful inventory draw this week along with tensions that remain escalated in the Strait of Hormuz,” said Brian Kessens, senior portfolio manager at energy investment manager Tortoise, noting “the prospect of lower rates and U.S.-China trade talks are buoying economic prospects.”

Brent crude against, which Nigerian oil is measured, rose to $65.11 a barrel from $62.80 on Monday. While the US West Texas Intermediate crude oil rose 2.5 percent to $58.27.