Oil prices increased on Friday driven by the US Federal Reserve’s (Fed) indication of potential interest rate cuts and the ongoing deadlock in cease-fire negotiations in the Middle East, reversing a 0.5% decline earlier in the week.
International benchmark Brent crude rose 0.07% to $77.28 per barrel at 10.24 a.m. local time (0724 GMT), down from the previous session’s close of $77.22.
US benchmark West Texas Intermediate (WTI) increased by 0.06% to $73.06 per barrel, after closing at $ 73.01 in the prior session.
Both benchmarks began to rally on Friday as investors turned their attention to the Fed’s roadmap for September.
While analysts marked that the Fed is expected to cut interest rates by a total of 100 basis points by the end of the year, investors are now focused on Fed Chair Jerome Powell’s speech on Friday at the annual Jackson Hole symposium in the US state of Wyoming.
The growing expectations that the Fed will cut interest rates in September, supports upward price movements as a rate cut would likely to weaken the US dollar against other currencies, positively impacting oil demand.
The US dollar index fell by 0.21% to 101,30 at 10.00 a.m. local time (0700 GMT), compared to the previous trading session.
Meanwhile, the unsuccessful cease-fire negotiations in the Middle East, home to a vast majority of global oil reserves, contributed to price increases by heightening supply concerns among market players.
The latest round of mediated negotiations between Israel and Hamas concluded on August 16 in Doha, Qatar. During this session, the US presented a “final bridging proposal” which the White House stated aligns with the principles endorsed by President Joe Biden on May 31.’
However, the parties did not reach an agreement, as Hamas has consistently demanded the complete withdrawal of Israeli forces from Gaza and a permanent end to the conflict as conditions for any cease-fire. In contrast, Israeli Prime Minister Benjamin Netanyahu has rejected these demands, asserting that Israeli troops will remain in Gaza for as long as deemed necessary.
