Oil finds support following ECB’s rate cut decision

The front-month ICE Brent futures gained $1.46/bbl to settle at $79.87/bbl on Thursday, after the European Central Bank (ECB) cut its key interest rate by 0.25%.

PHOTO: European Central Bank's headquarters in Frankfurt, Germany. Getty Images

The ECB has cut its key interest rate by a quarter-point to 3.75% from a nine-month high of 4% at the bank’s 26-member rate-setting council meeting on Thursday.

“[Brent] crude regained buoyancy as the financial markets cheered the European Central Bank’s first rate cut,” VANDA Insights’ founder and analyst Vandana Hari said.

This news has bolstered the oil market's anticipation of a soon-than-expected rate cut by the US Federal Reserve (Fed), which will meet next week to discuss monetary policies. Last month, Fed chairman Jerome Powell said that the US central bank is expected to cut interest rates in 2024 from the current level of 5.25-5.5%.

Lower interest rates make the greenback weaker for non-dollar holders, which can support demand growth for dollar-denominated commodities like oil.

By Aparupa Mazumder 

Please get in touch with comments or additional info to news@engine.online