Exciting: Oil prices stabilize ahead of Fed's interest rate decision

Oil prices stalled on Wednesday after rising in the last two sessions as investors awaited the anticipated rate cut by the U.S. Federal Reserve. The situation in the Middle East, which remains tense, also supports the market. Brent crude futures for November fell by 3 cents to $73.67 per barrel, while U.S. crude futures for October dropped by 11 cents, or 0.2%, to $71.08 per barrel. Both contracts had gained about $1 per barrel on Tuesday, influenced by ongoing supply disruptions in the U.S. following Hurricane Francine and the expectation that demand could increase due to a Fed rate cut. Potential supply disruptions in the Middle East following Israel's attacks on the militant group Hezbollah in Lebanon also supported prices. Investors are now looking to the Fed's rate cut, which could boost U.S. oil demand and weaken the dollar. Mitsuru Muraishi, an analyst at Fujitomi Securities, explained that markets had calmed as the effects of the hurricane and the Middle East conflicts were already priced in. He expects that oil prices could maintain an upward trend after the Fed’s rate cuts, with analysts anticipating a half-percentage-point reduction. Hezbollah announced retaliatory actions after the explosions in Lebanon killed at least eight people and injured nearly 3,000 others, including fighters and the Iranian envoy in Beirut. Israel declined to comment on the detonations. Further support came from the prospect of U.S. oil purchases for the Strategic Petroleum Reserve (SPR). The Biden administration plans to buy up to six million barrels for the SPR, which would be the largest purchase to replenish the reserve since a historic sale in 2022. Data released by the American Petroleum Institute (API) on Tuesday showed mixed results: crude oil inventories rose by 1.96 million barrels in the week ending September 13, while gasoline and distillate stocks both increased by about 2.3 million barrels. Reuters estimates that crude oil inventories declined by about 500,000 barrels last week. The U.S. Energy Information Administration report is expected on Wednesday.