Oil Gains as Traders Track Risk-On Tone and Middle East Tension

By Bloomberg

Sep 19, 2024

image is BloomburgMedia_SK03XYT1UM0W00_19-09-2024_09-22-27_638623008000000000.jpg

Storage tanks at the West Indies Oil Company terminal in St. John's, Saint John Parish, Antigua, Saturday, April 22, 2023. Antiqua is part of a twin-island nation lying between the Caribbean Sea and the Atlantic Ocean consisting of two major inhabited islands and a number of smaller islands. Photographer: Bing Guan/Bloomberg

(Bloomberg) -- Oil advanced as a risk-on tone swept across wider financial markets following the steep interest-rate cut by the Federal Reserve, while traders monitored escalating tensions in the Middle East.

Brent futures climbed to near $74 a barrel after closing little changed on Wednesday, while West Texas Intermediate was above $71. European stock futures gained alongside Asian equities as the Fed’s move reinforced expectations that the US economy will avoid a downturn.

Investors are closely watching developments in the Middle East after Israel’s Defense Minister Yoav Gallant declared what he called a “new phase” in the war with regional Islamist groups. That’s raised fears about a wider conflict that could involve Iran, an OPEC producer.

Brent is still on track for the biggest quarterly loss this year on concerns over China’s economic slowdown and ample supply. US gasoline demand fell further below 9 million barrels and jet fuel consumption ebbed for a third straight week, according to government data, adding to bearish headwinds.

Shrinking US inventories could underpin further price gains. Crude stockpiles at the key storage hub at Cushing, Oklahoma, are significantly lower than the five-year seasonal average and close to what’s considered “tank bottom” levels, according to EIA data.

By Bloomberg News