Oil rates increase by 2 percent due to US interest rates cut

(MENAFN) Oil prices experienced a rise of 2 percent on Thursday after the Federal Reserve implemented a significant cut in interest rates in the United States. This decision assisted in the recovery of global benchmark Brent crude, which had recently hit its lowest level in nearly three years.

By 12:19 p.m. Eastern Time (16:19 GMT), Brent futures climbed to USD75.09 a barrel, increasing by USD1.44, or 2 percent, to bounce back from last week’s figures that fell below USD69 per barrel. In addition, United States crude saw an increase of USD1.53, or 2.1 percent, to reach USD72.44 a barrel.

The Federal Reserve reduced interest rates by half a percentage point on Wednesday. Typically, such cuts stimulate economic activity and boost energy demand; however, the market also interpreted this move as an indication of a weakening labor market in the United States, which could slow economic growth.

"While the 50 basis point cut hints at harsh economic headwinds ahead, bearish investors were left unsatisfied after the Fed raised the medium-term outlook for rates," analysts from ANZ commented.

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