Interest rate cut sends WTI to new record

The price of West Texas Intermediate crude oil for October delivery which sat at $81.45 per barrel on the New York Mercantile Exchange on Tuesday, about half an hour before the US Federal Reserve said it was cutting interest rates by half a percentage point to 4.75 percent, soared to over $82 per barrel right after the decision was announced before settling at a gain of 94 cents on the day to $81.51 per barrel, a new closing record.

Brent crude was 52 cents higher to $77.50 per barrel on the Intercontinental Exchange in London.

WTI had already gained in anticipation of Wednesday’s weekly US inventories report from the Energy Information Administration as one survey showed that analysts expect crude oil inventories to be down by 1.5 million barrels in the week ending September 14, with gasoline stockpiles also down by over a million barrels but distillates stocks to be over 1 million barrels higher.

Also playing into the gains were news reports of the bombing of a pipeline in northern Iraq which caused crude oil to spill into the Tigris River, continuing supply concerns and the development of new tropical storms in the Atlantic Ocean that could threaten oil-production regions in the Gulf of Mexico.

Nymex October gasoline was up 1.61 cents to $2.0603 per gallon, while November heating oil added 1.36 cents to $2.2432 per gallon.

Natural gas dropped 8.5 cents to $5.568 per 1,000 cubic feet.