US rate cut fails to boost Brent’s price
The front-month ICE Brent contract has dropped by $0.92/bbl on the day, to trade at $67.13/bbl at 09.00 GMT.
IMAGE: An oil pump jack. Getty Images
Upward pressure:
Brent crude’s price has found little support after the US Federal Reserve (Fed) cut interest rates by 25 basis points earlier this week, to a range between 4-4.25%.
The announcement marked the first interest rate cut in 2025. Market analysts expect the US central bank to make more cuts in this year.
“Monetary policy easing cycles have traditionally been positive periods for commodity markets,” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.
Lower US interest rates can spur demand by making dollar-priced oil cheaper for foreign buyers.
Downward pressure:
Downside risks to global oil supply have continued to push prices lower, according to market analysts.
The oil market’s biggest concern right now is a looming glut, expected by year-end and into 2026, as OPEC+ members steadily restore production.
Earlier this month, the Saudi Arabia-led coalition agreed to collectively increase supply by 137,000 b/d in October.
OPEC+ members introduced two voluntary output cuts in 2023 – 1.65 million b/d in April and 2.2 million b/d in November.
The group plans to fully unwind the 2.2 million b/d reduction this month, while the latest decision begins phasing out the April cut.
“A broader narrative of an impending global oil surplus is capping the upside,” said VANDA Insights’ founder and analyst Vandana Hari.
By Aparupa Mazumder
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