📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Oil rises settles higher; US inflation data feeds rate cut hopes

Published 07/10/2024, 08:39 PM
Updated 07/11/2024, 03:06 PM
© Reuters. FILE PHOTO: A view shows oil tanks of Transneft oil pipeline operator at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel/File Photo

By Shariq Khan

NEW YORK (Reuters) -Oil prices rose for the second consecutive session on Thursday with the Brent benchmark settling above $85 a barrel as hopes rose for U.S. interest rate cuts after data showed an unexpected slowdown in inflation.

Brent crude futures rose 32 cents, or 0.4%, to settle at $85.40 a barrel. U.S. West Texas Intermediate crude futures rose 52 cents, or 0.6%, to $82.62 a barrel.

Data showed U.S. consumer prices fell in June, stoking hopes the Federal Reserve will cut rates soon. After the data, traders priced an 89% probability of a rate cut in September, up from 73% on Wednesday.

Slowing inflation and interest rate cuts will likely spur more economic activity, Growmark Energy analysts said.

Fed Chair Jerome Powell acknowledged the recent improving trend in price pressures, but told lawmakers more data was needed to strengthen the case for rate cuts.

The data pulled the U.S. dollar index lower and that should support oil prices, said Gary Cunningham, director of market research at Tradition Energy. A softer greenback can lift demand for dollar-denominated oil from buyers using other currencies.

Prices also rose on Wednesday, snapping a three-day losing streak after U.S. data showed a draw in crude stocks in the world's top oil market along with declining inventories and strong demand for gasoline and jet fuel.

Front-month U.S. crude futures recorded their steepest premium to the next-month contract since April. Market participants' willingness to pay premiums for earlier delivery dates, a structure known as backwardation, is typically a sign of supply tightness.

Some still believe the oil demand outlook is tenuous. In its monthly oil market report, the International Energy Agency (IEA) saw global demand growth slowing to under a million barrels a day this year and next, mainly reflecting a contraction in China's consumption.

© Reuters. FILE PHOTO: A view shows oil tanks of Transneft oil pipeline operator at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel/File Photo

Still, producer group OPEC in its monthly report on Wednesday kept forecasts for world demand growth unchanged, at 2.25 million for this year and 1.85 million bpd next year.

"OPEC and the IEA demand forecast are wider apart than usual, partly due to the differences of opinion over the pace of the world's transition to clear fuels," StoneX analyst Alex Hodes said.

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.