Friday, June 21, 2024
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Oil Prices Increase as Expectations for Rate Cuts are Strengthened by US Economic Data

Due to the US job market’s stabilization and slower-than-expected inflation data, oil futures slightly increased on Thursday. This raised expectations that the Federal Reserve would start reducing interest rates in the autumn.

By 1:00 p.m. EDT (1700 GMT), Brent crude futures were up 32 cents at $83.07 per barrel. West Texas Intermediate (WTI) oil for the US increased by 44 cents to $79.07.

According to the US Labour Department, the number of Americans submitting new claims for unemployment benefits decreased by 10,000 last week to a seasonally adjusted 222,000, suggesting both an underlying strength and a stabilization of the labor market.

John Kilduff of Again Capital LLC stated, “Even though the jobless claims were low, the report was weak enough that it’s going to allow the Fed to get in and cut.” “Despite its lackluster performance thus far, the strong employment trends do indicate strong petrol demand as we look out.

In contrast, US consumer prices increased less than anticipated in April, supporting financial market expectations for a Federal Reserve interest rate cut in September that might tame the strength of the dollar and lower the cost of oil for holders of other currencies.

The front-month futures contract for Brent saw an intraday low of $81.05 on Wednesday, the lowest since February 26. However, the mixed US oil inventory data that has restrained oil prices helped Brent bounce back to roughly 0.5% higher on the day.

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