Oil prices finished higher on Wednesday, with benchmark Brent futures breaking $80 a barrel for the first time since May, as U.S. inflation statistics fueled hopes that the Federal Reserve will hold off on raising interest rates in the world's largest economy. According to data from the United States, consumer prices climbed marginally in June, …
Oil prices finished higher on Wednesday, with benchmark Brent futures breaking $80 a barrel for the first time since May, as U.S. inflation statistics fueled hopes that the Federal Reserve will hold off on raising interest rates in the world’s largest economy.
According to data from the United States, consumer prices climbed marginally in June, marking the smallest annual gain in more than two years. Markets anticipate another interest rate hike, but oil dealers believe that may be the last. Higher interest rates can limit economic growth and diminish demand for oil.
“This is the lowest number since the pandemic… but keep in mind that this is still a temporary situation.” However, traders are generally pleased with the inflation estimates,” said Naeem Aslam, chief investment officer at Zaye Capital Markets.
Brent crude futures rose 71 cents, or 0.9%, to $80.11 a barrel. WTI crude in the United States rose 92 cents, or 1.2%, to $75.75 a barrel.
According to the US Energy Information Administration (EIA) and the International Energy Agency (IEA), the market will tighten through 2024.
According to the IEA, the oil market will remain tight in the second half of 2023 due to robust demand from China and developing countries combined with production reduction from major producers. The IEA is scheduled to provide new projections this week.
“The oil balance tightens when supply is revised down or demand is revised up.” If both occur at the same time, the impact may be seismic, according to PVM analyst Tamas Varga, referring to the EIA’s outlook.
“Clearly, it is unconcerned about an inflation-induced recession that could reduce global oil consumption.”
Saudi Arabia committed last week to extend a 1 million bpd production cut into August, while Russia will cut exports by 500,000 bpd.
A report by the US Energy Information Administration of a considerably larger-than-expected rise in US oil stockpiles of over 6 million barrels last week pushed up prices.
During the Fourth of July holiday week, gasoline stocks stayed nearly steady at 219.5 million barrels, a condition that is “almost unheard of,” according to Price Futures Group analyst Phil Flynn. Analysts anticipated a strong demand for gasoline stockpiles as drivers hit the road for holiday travel.
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