Oil prices surged after the U.S. Federal Reserve’s decision to cut interest rates, sparking renewed optimism in global markets. Brent crude saw a 4.3% rise this week, while U.S. WTI crude climbed by 4.8%. The U.S. rate cut, aimed at stimulating economic activity, has been a key driver behind this rally. Analysts suggest that oil prices surged after U.S. rate cut, which may help the U.S. economy avoid a downturn and boost oil demand.
One major factor in the price increase is the significant drop in U.S. crude stockpiles, which have fallen to a one-year low. This decline has fueled concerns about supply shortages, pushing prices higher. Additionally, rising tensions in the Middle East continue to support oil prices, as geopolitical instability could disrupt the supply chain.
However, there are still concerns about weak demand from China, the world’s largest oil importer. China’s industrial output and refinery production have slowed for five consecutive months, which could cap future price increases. Retail sales and new home prices in China have also weakened, signaling further challenges for oil demand.
Despite these mixed factors, oil prices remain steady for now. Citi analysts predict that oil prices surged after U.S. rate cut, but some caution that prices could plunge in 2025 if global demand continues to weaken.
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