Brent gains ahead of US rate cut meeting

The front-month ICE Brent contract has gained by $0.35/bbl on the day from Friday, to trade at $63.61/bbl at 09.00 GMT.

IMAGE: Oil pump jacks and field workers at dusk. Getty Images

Upward pressure:

Brent crude’s price has moved higher over the weekend as market participants prepare for a final interest rate cut by the US Federal Reserve (Fed).

Lower US interest rates typically boost demand by making dollar-denominated commodities, like oil, more affordable for non-dollar holders, potentially offering some upside support to prices in the medium term.

“The market is still priced for a December Fed rate cut and the continuation of the easing cycle into 2026,” SPI Asset Management managing partner, Stephen Innes, remarked.

The US central bank is set to hold its Federal Open Market Committee (FOMC) meeting over the next two days.

Downward pressure:

Oil market analysts note that the Russia-Ukraine backdrop is keeping a lid on Brent’s price gains, as Washington continues to push for an immediate peace deal.

The ceasefire could ease western sanctions on Russian energy exports, adding extra barrels to the global oil mix, according to analysts.

“The oil market has to price a very fat tail: a successful deal that leads to sanctions relief could unleash millions of “clean” barrels currently stranded in the shadow fleet,” Innes added.

However, progress in peace negotiations remain slow, with disputes over security guarantees for Kyiv, Reuters reports.

By Aparupa Mazumder

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