(London) Oil prices remained in the green on Friday, maintaining their gains after the Fed’s latest monetary policy decision, which suggests to the markets the possibility of rate cuts as early as next year.
Around 5:30 a.m., the price of a barrel of Brent from the North Sea for delivery in February rose 0.59% to $77.06.
Its American equivalent, a barrel of West Texas Intermediate (WTI) for delivery in January gained 0.66% to $72.05.
Crude prices “received much-needed support, poised to end a seven-week decline” driven by the US Federal Reserve (Fed) and “market expectations of a policy change in 2024,” explains Han Tan, analyst at Exinity.
As expected, the American central bank maintained its rates on Wednesday in a range of 5.25 to 5.50%, the highest in 22 years.
Fed officials mostly anticipate three or four cuts next year, bringing them to 4.6% at the end of 2024.
The president of the institution, Jerome Powell, acknowledged that the monetary committee discussed an early timetable for rate cuts, which he had until now ruled out.
The Fed’s latest monetary policy decision also weighed on the greenback, undermined by the prospect of rate cuts. Since black gold prices are denominated in dollars, a depreciation of the American currency encourages oil purchases by increasing the purchasing power of buyers using foreign currencies.
“As long as the US dollar continues to weaken on these hopes of a Fed turnaround, this should support oil benchmarks,” Mr Tan continued.
At the same time, the central bank’s decision has given momentum to risky assets, including oil.
Carsten Fritsch, analyst at Commerzbank, recalls, however, that the market still expects “oversupply in the first half of 2024”.
In its monthly oil report published Thursday, the International Energy Agency (IEA) also revises downwards its forecast for growth in oil demand for the 4e quarter of 2023, with a particularly marked slowdown in Europe.