Oil prices rise following US Fed's avoidance of interest rate hike on Wednesday

By Duygu Alhan

Oil prices were boosted in early trade on Thursday over the US Federal Reserve’s (Fed) decision to keep its federal funds rate unchanged on Wednesday.

International benchmark crude Brent traded at $85.70 per barrel at 11.40 a.m. local time (0840 GMT), a 1.26% rise from the closing price of $84.63 a barrel in the previous trading session on Wednesday.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $81.71 per barrel, up 1.58% from Wednesday's close of $80.44 per barrel.

The Fed avoided an interest rate hike, as largely expected, to maintain its federal funds rate constant at between 5.25% and 5.5%, the highest level in 22 years, in support of higher oil prices.

The prolonged tension between Israel and Palestine is causing investor concerns about secure supplies, as confrontations could escalate into regional turmoil, disrupting oil supply routes.

These risks were exacerbated when Egyptian authorities informed the border authority in Gaza that the Rafah crossing would open on Wednesday to facilitate the passage of critically injured Palestinians for treatment in Egypt.

The first British nationals passed through the Rafah border crossing from Gaza into Egypt, following the UK Foreign Office’s announcement on Wednesday of its offer of ground assistance.

"We will continue working with partners to ensure the crossing is opened again, allowing vital aid into Gaza and more British nationals to leave safely," it added in the statement.

However, the American Petroleum Institute's (API) announcement on Wednesday of an estimated rise in US crude oil stockpiles of 774,000 barrels, against the market expectation of an increase of 1.2 million barrels, indicated a fall in the world's biggest oil consumer country's oil demand, limiting further price increases.