Oil Steadies as U.S. Rate Cut Balances Weak China Demand
Oil prices remained largely unchanged on Monday, balancing the effects of a recent U.S. interest rate cut and reduced U.S. crude supply due to Hurricane Francine against weaker demand from China.
Brent crude futures for November were down 6 cents to $74.43 a barrel, while U.S. crude futures for November rose slightly by 4 cents to $71.04. Last week, both benchmarks gained over 4%, buoyed by the U.S. Federal Reserve’s decision to cut interest rates by 50 basis points and signal further cuts by the end of the year. However, concerns about softening demand from China continue to limit gains.
„Oil appears rangebound despite the boost from the Fed’s rate cut,“ noted Harry Tchilinguirian, head of research at Onyx Capital Group. Market sentiment could shift based on upcoming flash PMI data from Europe and the U.S., which, if disappointing, may apply downward pressure on oil prices.
Euro zone business activity showed unexpected contraction, adding to the soft economic outlook. Giovanni Staunovo, an analyst at UBS, highlighted that hopes for Chinese stimulus were dampened by weak European PMI data, which turned market sentiment negative.
Meanwhile, geopolitical tensions in the Middle East are adding potential risks to oil supply. Recent Israeli airstrikes on Iran-backed Hezbollah in Lebanon have raised fears of a broader conflict that could disrupt regional oil output, providing additional support for prices.
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