Oil Prices Inch Up Amid Signs of Easing Inflation in US
In a world where oil prices are constantly fluctuating, Friday brought a glimmer of hope as signs of easing inflationary pressures emerged in the US, the largest oil consumer globally, reported by Reuters.
Brent crude futures saw a modest increase of 33 cents, equivalent to 0.4 percent, reaching $85.73 per barrel by 6:00 a.m. Saudi time. On the other hand, US West Texas Intermediate crude futures climbed by 46 cents, or 0.6 percent, hitting $83.08 per barrel.
Despite the slight uptick in the past two trading sessions, both contracts were still on track for weekly declines.
Brent futures were expected to see a drop of approximately 1 percent for the week, following four consecutive weeks of gains. Meanwhile, WTI futures were relatively stable on a weekly basis, with a minor 0.1 percent decrease anticipated.
Investor confidence received a boost after recent data revealed a decrease in US consumer prices for June. This development raised hopes that the Federal Reserve might consider lowering interest rates soon, leading to potential economic growth and increased fuel consumption.
However, the market is eagerly awaiting clearer signals. While Fed Chair Jerome Powell acknowledged the positive trend in price pressures, he emphasized the need for more data to solidify the case for rate cuts.
Market strategist at IG, Yeap Jun Rong, noted, “Cooling US inflation numbers may support the case for the Fed to kickstart its policy easing process earlier rather than later, but it also adds to the series of downside surprises in US economic data, which points to a clear weakening of the US economy.”
Amidst these fluctuations, indications of robust summer fuel demand in the US continued to keep prices buoyant.
Recent government data revealed that US gasoline demand reached 9.4 million barrels per day during the week ending July 5, marking the highest level for that week since 2019. Additionally, jet fuel demand on a four-week average basis hit its peak since January 2020.
Senior oil analyst at LSEG, Emril Jamil, commented, “The market will remain rangebound, paralyzed by opposing forces of expected demand recovery fueled by an anticipation of a strong summer for fuels consumption… but sentiment remains pegged by ongoing economic weakness and uncertain demand recovery.”
Encouraged by the strong fuel demand, US refiners increased their activity and drew from crude oil stockpiles. Government data showed that US Gulf Coast refiners’ net input of crude surpassed 9.4 million barrels per day last week, reaching this level for the first time since January 2019.