Oil prices higher on Fed comments on inflation, Middle East tensions

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., Nov 22, 2019.  REUTERS/Angus Mordant/File Photo

SINGAPORE   – Oil prices edged higher on Friday after minutes from a Federal Reserve meeting suggested inflation was under control and as U.S. Secretary of State Antony Blinken prepared to visit the Middle East to prevent escalation in the Israel-Gaza conflict.

Brent crude futures were up 37 cents, or 0.5 percent, to $77.96 a barrel, while U.S. West Texas Intermediate crude futures rose 50 cents, or 0.7 percent, to $72.69 at 0229 GMT.

Both benchmarks, which are on track to end the first week of the year higher, had nearly recouped all losses from Thursday, when prices settled lower in a choppy session due to massive weekly gasoline and distillate stock builds.

While the minutes of the Fed meeting did not provide direct clues about when interest rate cuts might commence, the discussions signaled a growing sense that inflation is under control and rising concern about the risks that an “overly restrictive” monetary policy may hold for the economy.

READ: Fed minutes cite lower inflation risks, ‘overly restrictive’ policy

Lower interest rates reduce consumer borrowing costs, which can boost economic growth and demand for oil.

Also adding to supply concerns were developments in the Middle East, where Israeli forces are planning a more targeted approach in the north and further pursuit of Hamas leaders in the south, its defense minister said on Thursday.

READ: Oil prices rise amid fears over escalating tensions in Middle East

Aiming to help prevent the conflict from expanding, U.S. Secretary of State Blinken was set to travel on Thursday to the Middle East for a week of diplomacy, the State Department said.