Oil prices rose by about 1.% in response to the aggressive easing of the Fed's monetary policy. However, expectations of weaker global demand continue to put pressure on the oil market.
Yesterday, the Fed cut the interest rate by 0.5%, saying that such a move demonstrates the commitment of policymakers to keep unemployment low. Monetary policy easing typically boosted economic activity and energy demand, but the market also saw it as a sign of a weaker U.S. labor market that could slow the economy.
At the same time, the slowdown in China's economy - the world's largest importer of oil - may indicate a further decline in oil demand. Consumption in China is slowing due to the growth in sales of electric vehicles. At the same time, OPEC+ is expected to increase oil production in December.
The situation in the Middle East also remains in the focus of market participants - fears are growing that a major conflict between Israel and Hezbollah is looming on the horizon.
Meanwhile, a drop in U.S. oil reserves could undermine further price gains. Crude stockpiles at the key storage hub at Cushing are significantly lower than the five-year seasonal average. The U.S. Energy Information Administration (EIA) said yesterday that crude inventories declined by 1.630 million barrels in the week ended September 13, following an increase of 0.833 million barrels in the previous week. Economists had predicted a slip of 0.100 million barrels.