Oil Rises on Fed Rate Cut But Demand Concerns Linger — Market Talk

Silver jumped 3% to around $31 per ounce on Thursday, reversing losses from the previous session as the dollar pulled back from recent highs, removing downward pressure on commodity prices.

Those moves came as the US Federal Reserve delivered a supersized 50 basis point rate cut on Wednesday for its first rate reduction in four years.

Meanwhile, Fed Chair Powell said in the post-meeting press conference that they are not in a rush to ease policy and that half-percentage point cuts are not the “new pace.” Investors also awaited key policy decisions from the Bank of England and the Bank of Japan this week.

Elsewhere, markets await policy cues form China as an aggressive US rate cut provides room for Chinese authorities to ease policy further to support the economy.

Brent crude oil futures fluctuated around $73.8 per barrel on Thursday, attempting to recover losses from the previous session as markets assessed potential supply disruptions amid rising tensions in the Middle East. Reports indicated that Hezbollah radios exploded across southern Lebanon on Wednesday, following similar pager blasts the day before, which heightened fears of a broader regional conflict.

Meanwhile, the US central bank implemented its first interest rate cut since early 2020, with a larger-than-expected 50 basis point reduction, potentially boosting economic activity and oil demand.

However, optimism was tempered by Fed Chair Powell's statement that the central bank is not rushing to ease monetary policy.

Prices remained pressured by ongoing demand concerns from China, the leading oil consumer, exacerbated by weak economic data.

Additionally, markets are eyeing a looming supply increase from OPEC+.

WTI crude oil futures fluctuated around $70.8 per barrel on Thursday, attempting to recover losses from the previous session as markets assessed potential supply disruptions amid rising tensions in the Middle East. Reports indicated that Hezbollah radios exploded across southern Lebanon on Wednesday, following similar pager blasts the day before, which heightened fears of a broader regional conflict.

Meanwhile, the US central bank implemented its first interest rate cut since early 2020, with a larger-than-expected 50 basis point reduction, potentially boosting economic activity and oil demand.

However, optimism was tempered by Fed Chair Powell's statement that the central bank is not rushing to ease monetary policy.

Prices remained pressured by ongoing demand concerns from China, the leading oil consumer, exacerbated by weak economic data.

Additionally, markets are eyeing a looming supply increase from OPEC+.

Aluminum increased to a 14-week high of 2550.00 USD/T. Over the past 4 weeks, Aluminum gained 1.8%, and in the last 12 months, it increased 12.9%.

Malaysian palm oil futures climbed over 2% to near MYR 3,940 per tonne, surging for the second day and moving further away from their lowest in a month, reached earlier this week, amid a weaker ringgit and an increase in rival Dalian contracts.

The contracts rose for the third session, supported by signs of tighter production, particularly after the Southern Peninsula Palm Oil Millers Association reported a 4.0% month-on-month decline in output for September 1-15.

On cargo surveyors’ data, Malaysian palm oil product exports rose by 9.1% to 10.2% during the first 15 days of September compared to the same period in August. However, a decline in crude oil prices capped the bullish momentum after a jumbo Fed interest rate cut fueled worries about the US economy.

Additionally, India, the world’s largest edible oil importer, raised the basic import tax on crude and refined edible oils by 20 percentage points to 27.5% last week, aiming to protect farmers affected by lower oilseed prices.