Oil prices edge higher as rate cut hopes help offset demand fears By Investing.com

Investing.com– Oil prices rose slightly in Asian trade on Thursday, as the prospect of improved demand from lower U.S. interest rates helped traders shrug off growing concerns about weaker demand.

A series of weaker-than-expected U.S. inflation readings boosted confidence that the Federal Reserve will be more confident to start cutting interest rates in September, which traders hope will help boost oil demand.

Some elements of the risk premium also remained in oil markets after Hamas and Hezbollah launched strikes against Israel this week. The focus was mainly on an attack by Iran.

It rose 0.4 to $79.97 a barrel, while it rose 0.3 percent to $76.03 a barrel by 10:40 p.m. ET (02:40 GMT).

CPI data fuels reduced rate hopes

Weaker-than-expected inflation data on Wednesday raised hopes that the Federal Reserve will cut interest rates by at least .

The prospect of lower rates has spurred some bets that U.S. economic conditions will improve in the coming months, helping boost demand in the world’s biggest fuel consumer.

Oil nurses losses after surprise build-up in US stocks

Oil prices fell on Wednesday after government data showed an unexpected increase in U.S. output of about 1.4 million barrels, compared with expectations for a 1.9 mb draw.

While gasoline and distillate stocks still posted sharp declines, the build in total inventories – the first weekly build in seven – fueled fears that the busy summer travel season is coming to an end.

The stockpiling also came as OPEC and the IEA cut their outlook for oil demand growth in 2024, citing concerns about slowing demand in major oil importer China.

China’s mixed economic readings offer some support

A series of economic readings from China provided some positive signs for oil markets on Thursday.

rose more than expected in July, with the increase coming after Beijing launched a series of rate cuts and measures aimed at boosting consumption.

But the Chinese grew less than expected, and so did the . China has also grown unexpectedly.

Declining Chinese demand has been a key source of anxiety for crude oil markets, especially as the country struggles with a faltering economic recovery.