The boots have landed, and the Federal Reserve has announced its first interest rate cut since 2020, with a force of 50 basis points.

As one of the closely watched risk assets, will the international oil price be affected by this interest rate cut?

Reporters from the 21st Century Economic Report have noticed that there have been views pointing out that, from a pricing effect perspective, there is a negative correlation between international oil prices and the US dollar, meaning that after the interest rate cut, the dollar falls and oil prices rise.

However, from the current situation, the factors affecting the trend of international oil prices have become increasingly complex.

"The bullish effect of the interest rate cut on oil prices is only based on theoretical logic.

However, in the actual transmission process, the international oil price will take the market's own fundamental situation as the core factor."

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Reporters from the 21st Century Economic Report have learned from many analysts that crude oil has a more obvious commodity attribute, and the current market's concern about the prospect of crude oil demand makes the oil price still under pressure in the short term.

In response to the Federal Reserve's first interest rate cut in nearly four years, the outside world generally interprets that the United States will enter an interest rate cut cycle from now on.

Acting President of the Hong Kong Monetary Authority, Li Dazhi, commented on this on September 19, saying that the inflation in the United States has been largely confirmed to fall back, and the labor market has also shown signs of slowing down recently.

Therefore, the Federal Reserve decided to cut interest rates by 50 basis points, which is roughly in line with market expectations.

However, the ultimate purpose of the substantial interest rate cut is still to prevent the US economy and labor market from showing signs of weakness and to promote further decline in inflation.

In fact, there is a difference of opinion in the market on whether the strength of the 50 basis point decline exceeds expectations.

This can also be seen from the Federal Reserve's vote this time - the interest rate decision this time was not passed unanimously, and Federal Reserve Governor Michelle W. Bowman voted against it, preferring to cut interest rates by 25 basis points.

Returning to the theoretical relationship between interest rate cuts and oil prices, since crude oil is mostly settled in US dollars, from a pricing effect perspective, oil prices and the US dollar show a negative correlation, meaning that interest rate cuts are beneficial to oil prices.

Xi Jiahui, an oil analyst at Jinlian Chuang, said to reporters from the 21st Century Economic Report, "Generally speaking, after the Federal Reserve implements an interest rate cut, it will lead to a decline in the US dollar exchange rate, and a lower US dollar exchange rate will usually increase the demand of investors holding other currencies for oil priced in US dollars, thereby pushing up oil prices.

In addition, interest rate cuts will reduce loan costs, which is conducive to promoting economic development and increasing oil demand."

In Jinlian Chuang's analysis, oil futures market traders have recently focused on the decisions that major central banks around the world are about to make.

With the recent interest rate cuts in Europe and the United States, the stimulating effect on the oil market may begin to appear.

"Overall, interest rate cuts may stimulate the crude oil market to some extent, and it is expected that the mainstream operation range of WTI will be $69-$74 per barrel, and the mainstream operation range of Brent will be $71-$76 per barrel."

In fact, from the information in the market, after the Federal Reserve announced the substantial interest rate cut of 50 basis points, the market had a "stress response": the WTI oil price once surged, and US bonds and stocks surged at the same time, but it turned to fall during the monetary policy press conference held by Federal Reserve Chairman Jerome Powell, and the WTI oil settlement price fell by 1.84%.

At this press conference, Jerome Powell said, "If appropriate, we can speed up or slow down the pace of interest rate cuts, or even choose to pause interest rate cuts; this interest rate cut of 50 basis points does not mean that we are eager to take action."

"The future vague interest rate cut path also makes the changes in the prices of major assets uncertain."

Li Xinyue, a researcher at Zhuochuang Information Energy and Chemical Research, believes that before the interest rate decision meeting, the market has gone through a long period of tug-of-war bets on interest rate cuts and the magnitude of interest rate cuts, and the interest rate cut pricing has already begun.

Reporters from the 21st Century Economic Report have noticed that on September 19, the Brent crude oil contract 2411 reached a high of $74.77 per barrel in the market, standing above $74 per barrel for the first time since September 5.

However, the effect of the Federal Reserve's interest rate cut has indeed spread.

On Wednesday this week, the central banks of Saudi Arabia, the United Arab Emirates, and Bahrain all cut their domestic interest rates by half a percentage point after the Federal Reserve cut interest rates; Qatar was even more active, cutting by 55 basis points.

It is reported that this is the first time that Gulf countries have taken interest rate cuts since the epidemic to alleviate the impact of falling oil prices on energy-rich regions.

"Interest rate cuts are counter-regulation means for economic downturns, and economic downturns mean lower oil demand, which drags down oil prices.

Simple interest rate cuts can delay the economic downturn, but it is just a delay, and the trend is difficult to change, so the biggest bearish factor in the current oil market is still the decline in demand."

Zhu Guangming, an oil analyst at Zhuochuang Information, believes in an interview with reporters from the 21st Century Economic Report, "In the process of economic downturn, the demand for crude oil is relatively weak, and if you want to boost oil prices, you need to cut interest rates earlier."

Although from a theoretical logic perspective, interest rate cuts have a certain degree of benefit to international oil prices, the market generally believes that the extent of this benefit is relatively limited.

Especially under the expectation that the trend of crude oil is weak in the current fourth quarter, the benefits brought by interest rate cuts will also be further weakened.

In other words, if the crude oil market does not change the trend of weakening fundamentals of oversupply, the market's outlook on supply and demand is still pessimistic.

Since July this year, international oil prices have continued to fluctuate and fall back, and accelerated the decline in September.

On September 10, the Brent crude oil futures price once fell below the key level of $70 per barrel in the market.

At present, the market still maintains a bearish attitude towards the later trend of oil prices.

Even if the crude oil market has some short-term repair and rebound in the short term, the market has become forward-looking after experiencing ups and downs in recent years, that is, it reacts to expectations in advance.

Recently, the decline in US crude oil inventories, the interruption of oil and gas production in the Gulf of Mexico due to hurricanes, and the substantial interest rate cuts by the Federal Reserve have given the crude oil market certain short-term stimulation.

Even the latest research report released by Citigroup still expects that the oil market will face a counter-seasonal supply shortage of 400,000 barrels per day in the fourth quarter, which may provide some temporary support for Brent oil prices in the range of $70-$75 per barrel.

However, the overall demand for the market is still weak.

Some institutions point out that the current crude oil futures price usually leads the spot market by two quarters to reflect changes in supply and demand.

The previous sharp decline was a pricing of the expectation of severe oversupply in the first quarter of 2025.

Zhongjin Wealth Futures even believes that "now OPEC+ and its competitors have begun to turn to sufficient supply, and the market is no longer worried about future shortages; on the other hand, the global economic outlook for next year has deteriorated, and the risk of recession has led institutions to reduce their forecasts for crude oil demand.

As time goes on, the market's expectations for supply and demand imbalances are gradually increasing, and oil prices will face greater downward pressure."

According to the latest views of Citigroup analysts such as Francesco Martoccia, they reiterated that Brent crude oil is expected to fall to $60 per barrel in 2025, "even if OPEC+ maintains production cuts throughout the year, the global market will face a supply surplus of 1 million barrels per day."