🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

Oil prices settle higher as hopes for rate cuts stoke demand optimism

Published 05/15/2024, 09:09 PM
Updated 05/16/2024, 11:19 AM
© Reuters.

Investing.com -- Oil prices settled higher Thursday, as rising hopes for U.S. rate cuts following data showing a cooling job market and weaker inflation boosted bets on firmer crude demand.  

At 14:30 ET (19:30 GMT), West Texas Intermediate crude futures rose 0.8% to settle at $79.23 a barrel, and Brent oil futures rose 0.6% to $83.27 a barrel.

Cooling job market, slowing inflation restore rate cut hopes

Incoming economic data over the past few days including a jobless claims that surprised to the upside and slowing consumer price pressure have restore hopes for September rate cut, and helped boost hopes for firmer crude demand. 

The boost to demand hopes come just a day after a slew of weekly petroleum data showed that domestic demand is improving.  

"More importantly, gasoline and jet fuel demand increased on a four-week seasonal average," ANZ Research said in a note, citing EIA data released Wednesday.   

Sentiment on oil prices have also supported by a ongoing Middle East tensions as Israel launched its invasion of Rafa amid fading hopes of a Gaza ceasefire.

"Israel appears to have commenced an invasion of Rafah, while Hezbollah fired missiles and rockets at the Jewish state," ANZ Research said. 

OPEC+ meeting looms large 

The Organisation of Petroleum Exporting Countries and allies, a group known as OPEC+, meets on June 1, and are set to evaluate their currency output cuts in place.  

These producers are currently making voluntary output cuts totalling about 2.2 million barrels per day for the first half of 2024, led by Saudi Arabia rolling over an earlier voluntary cut.

These curbs come on top of earlier reductions announced in various steps since late 2022 and bring the total pledged cuts to about 5.86 million bpd, equal to just under 6% of daily world demand.

UBS expects them to agree to extend their voluntary production cuts, in an attempt to keep the oil market in balance.

“Oil inventories falling by less than we had expected in recent weeks and U.S. interest rates staying higher for longer are likely to have an impact on OPEC+’s policy of being proactive, preemptive, and precautionary,” said analysts at UBS, in a note dated May 14. 

“We now expect the eight member states with voluntary production cuts to extend them by at least three months ahead of the ordinary meeting at the beginning of June.”

(Peter Nurse, Ambar Warrick contributed to this article.)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.