Oil prices have risen on expectations of a Fed rate cut, but concerns about China's economic slowdown and weak demand have tempered gains.
Crude oil prices began this week with a gain on expectations that the U.S. Federal Reserve will announce an interest rate cut at its meeting that begins tomorrow and ends Wednesday. Additional support for prices came from the fact that a solid portion of Gulf of Mexico oil production remains shut in following Hurricane Francine. About 25% of oil production and 28% of natural gas production remain shut in after Francine made landfall last Wednesday in Louisiana.
Even so, gains were modest in evidence of the overwhelming bearish sentiment gripping oil markets. “We remain in the gradualist camp and expect the Fed to begin cutting by 25 basis points,” ANZ analysts said in a note regarding the upcoming Fed meeting, as quoted by Reuters. Some are even more optimistic, with traders surveyed by CME Group expecting a 59% probability of the Fed cutting rates by between 475 and 500 basis points.
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