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Crude oil futures snapped a three-session losing streak to finish higher Thursday, as the Federal Reserve’s decision to leave benchmark interest rates unchanged while hinting it might be done raising rates helped boost riskier assets and weaken the dollar.
“Energy traders are growing confident that the Fed is done tightening, given the recent soft labor market readings,” Oanda analyst Edward Moya said.
The Bank of England also held rates steady at its meeting Thursday for a second straight month after a string of 14 rate hikes.
Front-month Nymex crude (CL1:COM) for December delivery finished +2.5% to $82.46/bbl, after settling Wednesday at its lowest level since late August, and front-month January Brent crude (CO1:COM) closed +2.6% to $86.85/bbl.
Also, December gasoline (XB1:COM) +2.8% to $2.25/gal and December heating oil (HO1:COM) +2.2% to $3.03/gal.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)
Energy stocks posted broad gains on the day, with the oil and gas group (NYSEARCA:XLE) topping Thursday’s S&P sector standings, +3%.
Reuters reported Saudi Arabia is expected to reconfirm an extension of its voluntary 1M bbl/day oil production cut through December.
Traders continue to monitor the Israel-Hamas war for signs of a potential spillover that could involve Iran, but crude prices have surrendered all gains that ensued after the Hamas attack on October 7.
Still, the potential for disruption to oil production, infrastructure or logistics “will keep short sellers on their toes until there is a cease-fire called, leaving the market susceptible to potentially sizable short squeezes,” Sevens Report Research said, according to MarketWatch.