On Friday, U.S. light crude oil prices increased by more than 2% per barrel after U.S. Federal Reserve Chair Jerome Powell suggested that the central bank might be preparing to cut interest rates. Brent crude futures rose by $1.80 (2.33%) to $79.02 a barrel, while U.S. West Texas Intermediate (WTI) crude futures went up by $1.82 (2.49%) to $74.83. Powell endorsed a potential easing of the Fed’s policies, stating, “The upside risks to inflation have diminished. And the downside risks to employment have increased… The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
The U.S. dollar softened, making dollar-denominated oil more attractive to investors holding other currencies. A note from Morgan Stanley highlighted that a drawdown in oil inventories has been supporting prices, with inventories decreasing by about 1.2 million barrels per day over the last four weeks. Concerns over slowing oil demand from China, ongoing ceasefire talks in Gaza, and a decrease in U.S. energy rigs also influenced the market.