Tokyo: Oil futures rose to near $115 a barrel on Thursday, 1 May, gaining support from an interest rate cut by the US Federal Reserve and the extension of an oil workers’ strike in Nigeria.
Crude for June delivery was trading up $1.41 at $114.87 a barrel by 0153 GMT.
The gains in oil prices came as the Fed on Wednesday cut interest rates by a quarter point to 2% and indicated that it expects inflation to moderate. Traders took the Fed’s statement to suggest that more rate cuts are possible.
Rate cuts can boost liquidity in financial markets, brighten the outlook for economic activity and energy demand, and weaken the dollar which tends to bolster commodity prices.
Additional support came from striking oil workers who have shut down Exxon Mobil’s production in Nigeria and pledged to carry on their seven-day strike after failing to reach a deal with the US oil major at talks on Wednesday.
“(There are) not really very many cushions, so any of these disruptions will be bullish for the market,” said Robert Nunan of Mitsubishi Corp in Tokyo.
A spokesman for state-run Nigerian National Petroleum Corp (NNPC), which is mediating the talks, said on Wednesday that leaders of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) had agreed to suspend the strike while talks continued.
But union leaders said the stoppage, which has shut down virtually all Exxon’s 800,000 barrels per day of production in the West African country, would continue and the two sides would reconvene for negotiations at 1100 GMT on Thursday.
Additionally, Opec president Chakib Khelil said on Wednesday there was no global oil market imbalance, reiterating that current high prices were driven by the slide in the dollar due to a weak US economy.