Widening bets on a rate cut supports oil’s rise and Brent remaining above $85

Bullish sentiment for crude oil was strengthened at the start of the second quarter, after Chinese PMI data showed that manufacturing activity expanded for the first time in six months.
Trading volumes remained light with many markets closed for the Easter holiday, including Australia, Hong Kong in Asia, the United Kingdom and Germany.
The two benchmarks closed higher for the third month in a row in March, with Brent remaining above $85 a barrel since the middle of last month, as the OPEC+ alliance pledged to extend the period of production cuts until the end of June, with the aim of striking a balance between supply and demand in the oil market.
Oil analysts told Al-Eqtisadiah that the expansion of bets on lowering interest rates by the Federal Reserve supports the rise in crude oil prices.
In this context, Robert Stehrer, Director of the Vienna International Institute for Economic Studies, confirmed that the US stock market is supported by optimism that the Federal Reserve will begin lowering interest rates this year, and indices also recorded strong quarterly gains, led by a rise in some indices by more than 10% in the largest gains in the year. First quarter since 2019.
He explained that the question now is whether this rise will continue in the second quarter, pointing out that at the beginning of the year, the markets were expecting six interest rate cuts from the Federal Reserve, while now only three have been priced in, and officials have not yet indicated that inflation has decreased by what Enough to justify an interest rate cut.
For his part, Rudolf Huber, a researcher in energy affairs and director of a specialized website, said that the crude oil markets began the second quarter in a positive state of morale, and the continuation of the strong momentum will also depend on corporate profits, which begin in earnest in the second week of this month of April.
In turn, Matthew Johnson, an analyst at Oxera International Consulting, confirmed that oil prices rose, benefiting from recent gains, as optimistic factory data from China supported demand expectations, while concerns about tight supplies also supported prices.
He pointed out that manufacturing activity in China grew for the first time in six months in March, supporting demand for oil in the world’s largest crude importer even as the crisis in the real estate sector continues to put pressure on the economy. Regarding prices, oil futures contracts continued their gains, and Brent crude oil recorded $87.85 per barrel, the highest level since October 2023.