By Barani Krishnan
Investing.com – Poor U.S. economic data might actually be good for oil if it prompts the Fed to cut rates.
Crude futures ended off their lows on Thursday as expectations for monetary easing help offset some of the gloom for oil bulls after disappointing data again on U.S. services activity.
settled down 19 cents, or 0.4%, at $52.45 per barrel. It fell more than 2% earlier in the day, in a dramatic morning of selling that brought it just a penny away from cracking the key $51-per-barrel support for WTI.
actually settled 2 cents higher at $57.71.
Despite the market’s relatively better performance toward the close, both WTI and lost about 11% over eight days of trade.
Oil prices fell sharply earlier on Thursday after the Institute of Supply Management said its index fell to its lowest level since August 2016.
That came on the heels of the ISM’s purchasing managers index for , which posted the lowest reading since 2009.
Then, on Wednesday, the showed that private payrolls growth in August was not as strong as previously estimated.
Oil prices were also hit on Wednesday by data showing a larger-than-expected weekly rise in .
The combination of gloomy data – and concerns that there might be little progress at next week’s resumption of U.S.-China trade talks – diminished risk appetite across financial markets while appeal for safe havens like grew.
But growing fears that the U.S. economy may be headed for recession also heightened speculation that the Federal Reserve will again this month, pulling prices back from the day’s lows.
The Fed meets Oct. 29-30 and there’s talk of it doing another quarter-point cut. If true, that would be the central bank’s third rate cut for the year, with a reduction of 25 basis points each time.
The Fed has said its goal is to support the 10-year economic expansion, now the longest on record. Investing.com’s says there’s a 91% chance of an October rate cut.
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