By Adedapo Adesanya
The crude oil market gained more than $2 a barrel on Thursday as the US Federal Reserve and the Bank of England kept benchmark interest rates on hold.
At the two-day policy meeting this week, US officials argued whether financial conditions may be tight enough already to control inflation, or whether an economy that continues to outperform expectations may need still more restraint.
Ultimately, the US central bank on Wednesday kept its benchmark interest rate unchanged at 5.25 per cent -5.50 per cent.
The US Fed, which started raising interest rates in March 2022, held rates steady but left the door open to a further increase due to a strong US economy.
The Bank of England also held interest rates at 15-year highs of 5.25 per cent at its latest meeting on Thursday, the second straight month of steady rates after 14 back-to-back hikes.
The oil market reacted to the actions of the two leading economies of the world yesterday, with Brent increasing its value by $2.22 or 2.6 per cent to $86.85 a barrel and the US West Texas Intermediate (WTI) jumping by $2.23 or 2.8 per cent to $82.67 a barrel.
Interest rate hikes can slow economic growth and dampen oil demand.
On the supply front, top oil exporter, Saudi Arabia, is expected to reconfirm an extension of its voluntary oil-output cut of 1 million barrels per day through December.
Investors will also be watching for developments in the Middle East, which have kept oil markets on edge as a wider conflict could disrupt supplies around the region.
Fighting raged on around Gaza City on Thursday as advancing Israeli tanks and troops encountered fierce resistance from Hamas militants.
Efforts to contain the conflict in the Middle East have yielded results so far, leading to a decline in the war premium to oil benchmarks.
The Energy Information Administration (EIA) reported an inventory build of a modest 800,000 barrels for the week to October 27.
The American Petroleum Institute (API) had estimated an inventory increase of 1.35 million barrels for the period, also reporting declines in gasoline and distillate stocks.
The EIA’s latest weekly estimate compares with a crude oil inventory build of 1.4 million barrels for the third week of October.
