NEW YORK: Oil prices rose two per cent on Thursday after the Federal Reserve`s large cut in US interest rates, helping global benchmark Brent crude recover from its lowest in nearly three years hit last week.

Brent futures rose to $75.09 a barrel by 12:19pm ET (1619 GMT), up by $1.44, or 2pe, and rebounding from last week`s levels below $69 a barrel. US crude gained $1.53, or 2.1pc, to $72.44 a barrel.

The US central bank cut interest rates by half a percentage point on Wednesday. Interest rate cuts typically boost economic activity and energy demand, but the market also saw it as a sign of a weaker US labor market that could slow the economy.

`While the 50 basis point cut hints at harsh economic headwinds ahead, bearish investors were left unsatisfied after the Fed raised the medium-term outlook for rates,` ANZ analysts said in a note.

Rising tensions in the Middle East were also boosting crude prices, said Tim Snyder, chief economist at Matador Economics.

Weak demand from China`s slowing economy was limiting oil`s gains, said Alex Hodes, oil analyst at brokerage StoneX.-Reuters