HOUSTON- US light crude oil gained more than 2 percent a barrel on Friday after comments by US Federal Reserve Chair Jerome Powell indicated the central bank was preparing to cut interest rates.
Brent crude futures settled up by $1.80, or 2.33 percent , at $79.02 a barrel. US West Texas Intermediate (WTI) crude futures finished up $1.82, or 2.49 percent , at $74.83.
“The pivot by the Federal Reserve is real,” said Phil Flynn, senior analyst at Price Futures Group. “It’s impacting all commodities.”
This week, both benchmarks hit their lowest since early January, after the US government sharply lowered its estimate of jobs employers added this year through March, raising fears of a possible recession.
On Friday, Powell endorsed easing the Fed’s policies, saying further cooling in the job market would be unwelcome. He also expressed confidence inflation was within reach of the US central bank’s 2 percent target.
“The upside risks to inflation have diminished. And the downside risks to employment have increased,” Powell said in a highly anticipated speech to the Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming. “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 US dollar index softened to about 101.45 ahead of the speech. A cheaper greenback typically lifts demand for dollar-denominated oil from investors holding other currencies.
