Oil prices remained elevated on Thursday as Crude surged to USD 110, up nearly 3 per cent, while Brent stood at USD 126, gaining nearly 7 percent, extending the momentum built on the back of a strong surge earlier.
Market participants continue to assess the sustainability of the recent spike, which saw crude prices jump nearly 8 per cent in the prior trading session. Brent, which had climbed as high as USD 119 per barrel, maintaining gains into the morning trade.
Notably, US President Donald Trump indicated progress in discussions with Russian President Vladimir Putin, suggesting the possibility of a ceasefire announcement related to the ongoing Ukraine conflict. While details remain limited, any signs of de-escalation could influence energy supply dynamics, particularly in Europe. At the same time, Trump reiterated a firm stance on Iran, stating that the United States would not allow it to acquire nuclear weapons, while also claiming that Iran's economy is under significant strain. These developments have kept markets sensitive to any disruption or resolution in energy flows.
Beyond oil, the broader commodity complex reflected mixed signals. Gold hovered around USD 4,578 per ounce, while silver traded near USD 72.9. The dollar index at 98.7 remained relatively stable.
On Wednesday, The Fed chose to hold interest rates in the 3.5 per cent to 3.75 per cent range, though the vote was split 8-4, highlighting diverging views within the committee. Policymakers acknowledged that economic activity remains solid, but flagged that job growth has been uneven. Inflation, while moderating in parts, continues to run above target levels, an issue compounded by rising energy costs.
Federal Reserve Chair Jerome Powell struck a balanced tone, noting that the US economy is still expanding at a steady pace and that the labour market remains stable. However, he cautioned that inflation could edge higher in the near term, particularly due to elevated oil prices. Powell emphasised that the central bank remains flexible, keeping the door open for either rate hikes or cuts depending on incoming economic data. He also pointed out that the impact of the recent oil shock is likely to be less severe for the US compared to Europe and Asia, where energy dependence is higher.
US equity markets reflected this uncertainty. The Dow Jones Industrial Average fell by 280 points, while the S&P 500 and Nasdaq closed largely flat. Sectoral trends revealed a shift toward defensives, while technology stocks came under mild pressure. Energy stocks, however, saw support in line with rising crude prices.
On March 9, Brent crude surged over 27 per cent to trade at a multi-year high of USD 119 a barrel amid escalating Middle East tensions. The prices later dropped significantly after the announcement of coordinated oil reserve release by major G7 economies. The oil price, although at a multi-year high, was still lower than its all-time high of USD 147 per barrel seen in July, 2008. The recent hike was also lower than USD 130 per barrel price that was hit in 2022 during the Russia-Ukraine crisis.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
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