The Fed Watchers Guide to Oil Markets in 2024 and 2025 [Video]

This article is also featured in Energy Insights, which reflects a sample of ongoing research across the Center for Energy Studies’ diverse programmatic areas, all addressing the ever-evolving energy challenges across Texas, the U.S., and the globe. Read more from the inaugural edition.

In May 2023, the Federal Funds Rate topped 5% for the first time since the Great Recession of 2007–08.[1] From that time onward, market participants’ predictions have reversed course several times about when the Federal Reserve might stop raising interest rates to fight inflation and when it might reverse course and start reducing interest rates again. As of mid-June 2024, the picture remains murky. At one extreme, some are still forecasting two or more interest rate cuts before the end of the year. At the other extreme, some forecast a possible interest rate hike before the end of the year.[2] 

Figure 1 — West Texas Intermediate (WTI) and Supernormal Backwardation with Percentage Difference Between …