Oil Prices Rise as Fed Minutes Indicate Inflation Under Control

On Friday, oil prices climbed following the release of the Federal Reserve’s meeting minutes, which suggested that inflation is now under control.

Meanwhile, U.S. Secretary of State Antony Blinken is preparing for a tour of the Middle East aimed at preventing an escalation in the conflict between Israel and Gaza.

By 02:29 Greenwich Mean Time, Brent crude futures rose by 37 cents, or 0.5%, reaching $77.96 per barrel. Meanwhile, West Texas Intermediate (WTI) crude futures from the United States increased by 50 cents, equivalent to 0.7%, to $72.69 per barrel.

Instead of the standard crude oils nearly recouping all their losses suffered on Thursday when prices settled lower after a volatile session due to a significant weekly increase in gasoline and distillate inventories, the crudes are heading towards finishing the first week of the year on a high.

The minutes from the Federal Reserve’s meeting did not provide clear signals as to when interest rate cuts might commence. However, the discussions revealed a growing sense that inflation was becoming manageable and there was increasing worry over the risks of “over-tightening” monetary policy and its impact on the economy.

A decrease in interest rates results in lower borrowing costs for consumers, which can stimulate economic growth and increase demand for oil.

Concerns about supply have grown due to recent events in the Middle East. On Thursday, the Israeli Defense Minister announced that the military plans to adopt a more targeted approach in the northern part of the Gaza Strip, while continuing to target the leadership of the Palestinian resistance movement, Hamas, in the south.

The U.S. Department of State announced that Secretary Blinken will head to the Middle East to engage in a week-long diplomatic effort aimed at preventing the escalation of the conflict.