Brent crude futures were up $1.27, or 1.63%, at $78.49 a barrel at 9:50 a.m. CDT (1450 GMT), while US West Texas Intermediate (WTI) crude futures were up $1.33, or 1.81%, at $74.34.
“The Federal Reserve’s main direction is realistic,” said Phil Flynn, senior analyst at Price Futures Group. “It’s affecting all commodities.
Both benchmarks hit their lowest levels since early January this week after the US government sharply cut its estimate of jobs added by employers through March this year, raising fears of a possible recession.
Powell on Friday backed the Fed’s policy easing, saying further cooling in the job market would be undesirable and expressing confidence that inflation was within reach of the US central bank’s 2% target.
“The downside risk to inflation has receded. And the risks to employment have increased,” Powell said in a highly anticipated speech at the Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming. “The time has come to adjust policy. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.”
The US dollar index softened to around 101.45 ahead of the speech. A cheaper greenback typically increases demand for dollar-denominated oil from investors holding other currencies.
Morgan Stanley said in a note on Friday that lower oil inventories provided some support to oil prices.
“Currently, the balance in the oil market is tight, with inventories drawing about 1.2 million barrels per day over the past four weeks, which we expect to continue in the balance of the (third quarter),” the bank said.
Recent data from top oil importer China pointed to a struggling economy and slowing oil demand from refiners. A renewed push for a cease-fire in Gaza between Israel and Hamas has helped ease supply concerns and weighed on oil prices.
The US And Israeli delegations began a new round of meetings in Cairo on Thursday to resolve differences over a ceasefire proposal.
Ceasefire talks between Israel and Hamas to end the war in Gaza have eased fears that the conflict will affect crude oil supplies.
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