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Oil Prices Set to End Week Higher after US Rate Cut

The US last week announced a 10-nation coalition to counter the attacks in the Red Sea. - File Photo
The US last week announced a 10-nation coalition to counter the attacks in the Red Sea. - File Photo
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Oil Prices Set to End Week Higher after US Rate Cut

The US last week announced a 10-nation coalition to counter the attacks in the Red Sea. - File Photo
The US last week announced a 10-nation coalition to counter the attacks in the Red Sea. - File Photo

Oil prices eased on Friday, but were on track to register gains for a second straight week following a large cut in US interest rates and declining global stockpiles, Reuters reported.

Brent futures were down 50 cents, or 0.67%, at $74.38 a barrel at 1004 GMT while US WTI crude futures fell 48 cents, or 0.65%, at $71.47.

Still, both benchmarks were up 3.7% and 4% respectively on the week.

Prices have been recovering after Brent fell below $69 for the first time in nearly three years on Sept. 10.

"US interest cuts have supported risk sentiment, weakened the dollar and supported crude this week," UBS analyst Giovanni Staunovo said.

"However, it takes time until rate cuts support economic activity and oil demand growth," he added, regarding crude's more muted performance so far on Friday.

Prices rose more than 1% on Thursday following the US central bank's decision to cut interest rates by half a percentage point on Wednesday.

Interest rate cuts typically boost economic activity and energy demand, but some also see it as a sign of a weak US labor market.

The Fed also projected a further half-point rate cut by year-end, a full point next year and a half-point trim in 2026.

"Easing monetary policy helped reinforce expectations that the US economy will avoid a downturn," ANZ Research analysts said.

Also supporting prices were a decline in US crude inventories, which fell to a one-year low last week.

A counter-seasonal oil market deficit of around 400,000 barrels per day (bpd) will support Brent crude prices in the $70 to $75 a barrel range during the next quarter, Citi analysts said on Thursday, but added prices could plunge in 2025.

Crude prices were also being supported by rising tensions in the Middle East. Walkie-talkies used by Lebanese armed group Hezbollah exploded on Wednesday following similar explosions of pagers the previous day.

Security sources have said the Israeli spy agency Mossad was responsible, but Israeli officials have not commented on the attacks.

China's slowing economy also weighed on market sentiment, with refinery output in China slowing for a fifth month in August and industrial output growth hitting a five-month low.

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Billionaire Financier Bessent Confirmed as Trump’s Treasury Chief 

US investor and hedge fund manager Scott Bessent testifies before a Senate Finance Committee hearing on his nomination to be Secretary of the Treasury, on Capitol Hill in Washington, DC, on January 16, 2025. (AFP)
US investor and hedge fund manager Scott Bessent testifies before a Senate Finance Committee hearing on his nomination to be Secretary of the Treasury, on Capitol Hill in Washington, DC, on January 16, 2025. (AFP)
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Billionaire Financier Bessent Confirmed as Trump’s Treasury Chief 

US investor and hedge fund manager Scott Bessent testifies before a Senate Finance Committee hearing on his nomination to be Secretary of the Treasury, on Capitol Hill in Washington, DC, on January 16, 2025. (AFP)
US investor and hedge fund manager Scott Bessent testifies before a Senate Finance Committee hearing on his nomination to be Secretary of the Treasury, on Capitol Hill in Washington, DC, on January 16, 2025. (AFP)

Billionaire hedge fund manager Scott Bessent won Senate approval Monday to become US Treasury secretary, placing him at the forefront of implementing Donald Trump's economic agenda -- which is already triggering global jitters.

Bessent, a Wall Street veteran who was born and raised in South Carolina, has defended the Republican president's tax cutting and tariff proposals while urging efforts to secure supply chains and the dollar's global status.

On Monday, he cleared a confirmation vote with a comfortable margin of 68-29, with bipartisan support.

As Treasury chief, Bessent will have a hand in the administration's tax policies and its budget, confronting the debt limit and steering plans that could lead to fresh tariffs.

Mike Crapo, who chairs the Senate Finance Committee, said Monday that Bessent was "committed to restoring the prosperity and opportunity" seen under Trump's leadership.

But Ron Wyden, the top Democrat on the committee, warned it was unclear that Bessent would serve as a check on Trump's economic plans, which could weigh on consumers and small businesses.

Bessent, 62, has said he would back tougher sanctions on Russian oil majors as a way to end the war in Ukraine, while signaling a hawkish approach on China.

Trump returned to the White House this month vowing lower taxes to aid Americans squeezed by high costs of living, and tariffs to pressure other countries to align on US concerns.

The president has warned of tariffs on allies and adversaries - including major trading partners Mexico and Canada on February 1.

Now all eyes are on how his Treasury chief walks the line between supporting these efforts and avoiding tensions that may roil the world economy.

At his hearing, Bessent disagreed that Trump's proposed duties on imports would be paid for domestically, noting that levies can be used in negotiations, to remedy unfair trade practices or to boost revenues.

He also took aim at government spending and high budget deficits.

He will have to grapple with Trump's promised tax cuts - alongside their consequences for the US economy - as he begins his role.

The Treasury Department has oversight across areas from federal finances to bank supervision. It also oversees US sanctions.

- Family friend -

Bessent has known the Trump family for three decades and was friends with the president's late brother Robert, he previously said.

"I was all-in for President Trump," he said on Trump ally Roger Stone's radio show.

Bessent attended Yale University and served as chief investment officer of Soros Fund Management, the macroeconomic investment firm of liberal billionaire George Soros.

In 2015, he raised capital, including $2 billion from Soros, to start his own hedge fund.

More recently, Bessent said he had not spoken to Soros in years.

Bessent is chief executive at Key Square Group, but has committed to resigning from the position at the hedge fund and divesting his partnership share upon confirmation.

- 'Only-in-America' -

During his confirmation hearing, Bessent recounted taking an internship in finance -- a job that came with an office pullout sofa, allowing him to live in New York rent-free.

"I've been involved in the financial markets ever since," he told lawmakers. "My life has been the only-in-America story that I am determined to preserve for future generations."

Urging for all tools to be used "to realign the economic system to better serve the interests of working Americans," Bessent has criticized "unfair distortions" in global trade.

He previously floated the idea of Trump nominating a "shadow Fed chair" to dilute the influence of Federal Reserve chief Jerome Powell.

But he has since dropped the idea and stated that he supports the central bank's independence in policymaking.

"President Trump is going to make his views known, as many senators did," Bessent said in his hearing on January 16.

He added that on monetary policy, the Fed's rate-setting committee "should be independent."