Oil rises as US inflation eases By Reuters

By Paul Carsten

LONDON (Reuters) – Oil prices rose on Friday on signs of easing inflationary pressures in the United States, the world’s biggest oil consumer, peaking above $86, although it was still set for a weekly decline.

Brent crude futures were up 72 cents, or 0.8 percent, at $86.12 a barrel by 0819 GMT. U.S. West Texas Intermediate crude futures were up 85 cents, or 1 percent, at $83.47 a barrel. Both contracts won in the previous two sessions.

Brent futures were set to fall about 1 percent on the week after four weekly gains. WTI futures were broadly flat on a weekly basis.

Investor confidence was boosted after data on Thursday showed that US consumer prices fell in June, boosting hopes that the Federal Reserve will soon cut interest rates.

Lower rates are expected to boost economic growth, which would help boost fuel consumption.

The market, however, is still waiting for clearer signs of action. While Fed Chairman Jerome Powell acknowledged the recent trend of improving price pressures, he told lawmakers that more data is needed to strengthen the case for rate cuts.

“Cooling US inflation numbers may support the case for the Fed to start its policy easing process sooner rather than later, but it also adds to the string of negative surprises in US economic data that point to a clear weakening of the US economy. ,” said Yeap Jun Rong, market strategist at IG.

Indications of strong summer fuel demand in the US also supported prices.

U.S. gasoline demand was 9.4 million barrels per day (bpd) in the week ended July 5, the highest since 2019 in the week that includes the Independence Day holiday, government data showed on Wednesday. Demand for jet fuel on a four-week average was at its highest since January 2020.

“The market will remain limited, crippled by the opposing forces of an expected recovery in demand, fueled by anticipation of a strong summer for fuel consumption … but sentiment remains tied to continued economic weakness and an uncertain recovery in demand,” said Emril Jamil, senior oil analyst. at LSEG.

Strong demand for the fuel encouraged US refiners to ramp up activity and draw from inventories. U.S. Gulf Coast refiners’ net crude intake rose last week to more than 9.4 million bpd for the first time since January 2019, government data showed.

But weaker demand signs from China, the world’s biggest oil importer, could counter the U.S. outlook and weigh on prices.

“The recent downward correction is clearly over, although the speed of further upswing may be hampered by lower Chinese crude imports, which fell 11% in June from a year earlier,” said oil broker Tamas Varga VAT.