Oil prices up amid expectations of Fed rate cut, investor profit-taking

By Duygu Alhan

Oil prices increased on Tuesday following growing rate cut signals from the US Federal Reserve (Fed) and moderate investor profit-taking while global demand uncertainties and cease-fire attempts in Middle East limit price rises.

International benchmark Brent crude traded at $82.48 per barrel at 11.55 a.m. local time (0855GMT), an increase of 0.10% from the closing price of $82.40 per barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $78.52 per barrel at the same time, a 0.15% rise from the previous session that closed at $78.40 per barrel.

Analysts expect the US Federal Reserve (Fed) to cut interest rates 3 times by the end of the year, according to the pricing for the future policies of the bank.

Meanwhile, the signals received from the latest data point to a cooling in the labor market as one of the factors that reduce the risk perception on the grounds that it opens up space for the Fed's expansionary policy steps.

Low interest rates decrease the value of the US dollar against other currencies and supports upward price movements by influencing demand positively.

On Monday, the US dollar index reached its highest level by increasing 0.2% to 104.42 deterring more expensive oil trade and curtailing price rises on the back of profit-taking from higher prices on Tuesday.

While, the American Petroleum Institute (API) will release its US crude oil inventory estimates later in the day.

The market expectation is that stocks will increase by 700,000 barrels. The increase in stocks could put downward pressure on prices by pointing to a decrease in oil demand in the US, the world's most oil-consuming country. The Energy Information Administration (EIA) will disclose official figures on Wednesday.

On the other hand, ongoing concerns over economy growth in China continues to weigh on prices, negatively affecting the demand outlook in the world's largest crude oil importer.

Meanwhile, cease-fire efforts in the Middle East, home to a vast majority of global oil reserves, put downward pressure on oil prices by relieving market players' supply concerns.

UK Prime Minister Keir Starmer called for an immediate cease-fire in Gaza during a speech in Parliament on Monday, emphasizing the urgent need for humanitarian aid and the return of hostages.

Starmer said he spoke with the leaders of Israel and the Palestinian Authority where he expressed that he fully supports "Israel's right to security and the desperate need to see the hostages returned. And I've also been clear that the situation in Gaza is intolerable and that the world will not look away as innocent civilians, including women and children, continue to face death, disease, and displacement."