Oil prices jumped on Thursday following a larger-than-anticipated weekly reduction in U.S. crude inventories and hopes the Federal Reserve will cut interest rates early in 2024.
Oil continues its upward movement, with WTI crude up by 1.91% and Brent crude by 2.03% at the time of writing on Thursday.
This is in part driven by indications from the U.S. Federal Reserve suggesting a combined reduction of 75 basis points in 2024.
Recently, the Fed chose to keep interest rates steady at 5.25%- 5.5% for the third consecutive meeting.
Federal Reserve Chair Jerome Powell indicated on Wednesday that the era of significant tightening in monetary policy is probably at an end.
The Federal Open Market Committee statement included updated projections, forecasting increased GDP growth for the current year at 2.6 percent, up from the September projection of 2.1 percent.
“Market hopes that the Fed will end up introducing rate cuts more rapidly next year and lowering borrowing costs have lifted hopes of a softer landing for the US economy, and expectations that this will mean demand for energy will remain more buoyant,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“Figures showing stockpiles of crude fell more than expected last week also have helped support prices,” she added.
