U.S. crude oil rose nearly 2% on Thursday, one day after the Federal Reserve slashed interest rates for the first time in more than four years and as tensions in the Middle East continued to escalate.
The Fed surprised the market on Wednesday with a bigger-than-expected cut of a half percentage point. Oil prices, however, closed slightly lower as rate reductions had largely already been priced in.
The U.S. benchmark has now clawed back its losses this year, though it is still down more than 11% in the third quarter.
Phil Flynn, senior market analyst at the Price Futures Group, said the Fed cut appears to be “shaking out some hedge fund shorts from their bearish oil obsession.”
Here are Thursday’s energy prices:
- West Texas Intermediate October contract: $72.28 per barrel, up $1.37, or about 1.93%. Year to date, U.S. crude oil is up nearly 1%.
- Brent November contract: $75.01 per barrel, up $1.36, or about 1.85%. Year to date, the global benchmark is down more than 2%.
- RBOB Gasoline October contract: $2.06 per gallon, up 2.45%. Year to date, gasoline is down roughly 2%.
- Natural Gas October contract: $2.293 per thousand cubic feet, up 0.39%. Year to date, gas is down more than 8%.
Crude futures are on the rebound again as tensions soar between Israel and the Iranian-backed militia group Hezbollah in Lebanon. Prices are also finding support after U.S. oil stockpiles fell by 1.6 million barrels last week.
Pagers and walkie-talkies used by Hezbollah exploded this week, killing dozens and wounding thousands across Lebanon. U.S. officials told NBC News that Israel was behind the pager attack. Israel has not taken responsibility for the attacks.
Israeli Defense Minister Yoav Gallant said Wednesday that his country’s focus is shifting from Gaza to the northern border with Lebanon, where some 60,000 Israelis have been evacuated, as a “new phase” of the war begins.
Oil market analysts have warned for months that an all-out war between Israel and Hezbollah, which until now have traded rocket fire, could force OPEC member Iran to directly intervene, raising the risk of disruptions to Middle East crude oil supplies.
