Oil increases after recording lowest 3% price plummet

By Duygu Alhan

Oil rose on Thursday after prices plummeted 3% to record the lowest closing price of the last seven weeks following the US Federal Reserve’s (Fed) decision to keep interest rates unchanged on Wednesday.

International benchmark Brent crude traded at $84.11 per barrel at 10.50 a.m. local time (0750GMT), an increase of 0.80% from the closing price of $83.44 per barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) traded at $79.66 per barrel at the same time, a 0.83% rise from the previous session that closed at $79 per barrel.

Reports on Thursday revealed that seven Palestinians were killed and several others injured on Wednesday in an Israeli airstrike targeting the city of Al-Zahra and the town of Al-Mughraqa north of the Nuseirat refugee camp in the central Gaza Strip.

Although expectations of a ceasefire in the region put downward pressure on prices, Israel's ongoing attacks in the region have halted this trend by once again fueling supply concerns.

Meanwhile, concerns over disruptions to global supply routes through the Red Sea continue to impact oil prices. The Yemeni Houthi group is targeting Israeli or Israeli-linked vessels through the Red Sea, which the US is retaliating against.

According to the United States Central Command (CENTCOM), the US destroyed an uncrewed surface vessel (USV) in an area of Yemen controlled by the Houthi group on Tuesday.

Data released by the US Energy Information Administration (EIA) late on Wednesday limited further price rises and signaled weak demand in the US, the world’s largest oil consumer.

US commercial crude oil stocks rose by about 7.3 million barrels to 460.9 million barrels, compared to the market prediction of a fall of around 2.3 million barrels.

Additionally, the US Fed's decision to keep the policy rate in a range of 5.25% to 5.5%, the same level it has held since its July 2023 meeting, put downward pressure on oil prices.

The possibility of a rate cut would limit further price increases, as generally high interest rates boost the value of the US dollar, making oil more expensive for holders of other currencies.