Dhaka, Bangladesh (BBN)- Oil prices rose nearly 3.0 per cent on Monday, spurred by hope of an interest rate cut by the US Federal Reserve along with a prolonged blockade in cease-fire negotiations in the Middle East.
Brent crude futures climbed $2.30, or 2.91per cent, to $81.32 a barrel by 1148 GMT, while U.S. crude futures were at $77.05 a barrel, up $2.22, or 2.97 per cent.
Brent's intra-day high of $81.35 a barrel is the highest the contract has traded in 11 days, according to global media reports.
US Federal Reserve Chair Jerome Powell on Friday signaled an interest rate cut at the central bank's upcoming meeting in September. Commodity prices increased after Powell's much-anticipated speech at the annual Jackson Hole symposium in the US state of Wyoming.
A reduction in interest rates in the US, the world's largest oil consuming country, is expected to increase economic activity and raise oil demand.
Fed Chair Powell said his confidence has grown that inflation is on a sustainable path back to 2.0 per cent, saying "time has come" for an adjustment in monetary policy.
Analysts are certain that the Fed will cut interest rates by 25 basis points next month, while the possibility of a 50 basis point cut is also on the table.
The unsuccessful cease-fire negotiations in the Middle East, home to a vast majority of global oil reserves, contributed to price increases and heightened supply concerns among market players.
Despite international ceasefire negotiations, Israel hasn't slowed its attacks on the blockaded Gaza Strip. Since Oct. 7, 2023, the Israeli onslaught has resulted in over 40,400 Palestinian deaths, mostly women and children, and over 93,000 injuries, according to local health authorities.
The latest round of cease-fire talks ended in Cairo on Sunday without an agreement. The Palestinian group Hamas demanded Israel adhere to what was agreed upon on July 2, in accordance with a proposal by US President Joe Biden laid out on May 31 and a UN Security Council resolution.
On the other hand, gold prices rose to record highs last week, with the spot price reaching $2,531.60 per troy ounce on Tuesday – a 20 per cent year-to-date rise.
Hopes that the US will start easing monetary policy helped push the price of the precious metal higher, while the increase in value also likely reflects global economic uncertainty and market volatility - investors typically view gold as something of a safe haven during periods of uncertainty.
BBN/SSR/AD