Oil Prices Steady, Set for Positive Week Amid Mixed Market Signals
Oil Prices Show Little Movement but Set for Positive Week
Oil prices moved little in Asian trade on Friday, but they are headed for a mildly positive week. A softer dollar, shrinking U.S. inventories, and increased Chinese stimulus have fueled hopes of improving demand.
Weekly Performance and Market Dynamics
Brent oil futures expiring in July rose 0.1% to $83.33 a barrel, while West Texas Intermediate (WTI) crude futures steadied around $78.80 a barrel by 20:55 ET (00:55 GMT). Brent and WTI futures were up between 0.7% and 1.4% this week, with most gains occurring on Thursday after U.S. consumer inflation readings came in softer than expected.
Impact of U.S. Inflation Data and Fed Comments
The softer inflation readings weakened the dollar and increased bets that the Federal Reserve could begin trimming rates as early as September. Looser monetary conditions typically bode well for crude demand. However, optimism was tempered by several Fed officials who cautioned that more evidence is needed to confirm a sustained decline in inflation before rate cuts can begin.
Mixed Signals on Oil Demand
Crude markets received mixed signals on demand this week. A larger-than-expected draw in U.S. inventories bolstered optimism about improving demand as the travel-heavy summer season approaches. However, the International Energy Agency (IEA) slightly trimmed its annual demand forecast, citing global economic uncertainty amid sticky inflation and potentially prolonged high interest rates.
Conversely, the Organization of Petroleum Exporting Countries (OPEC) maintained its demand forecast for 2024, anticipating an eventual economic recovery in China and potentially lower interest rates later in the year. OPEC is also expected to maintain its current pace of production cuts beyond end-June, presenting a tighter outlook for supply.
China's Role and Upcoming Data
China's economic outlook continues to influence oil markets. Beijing announced a massive $1 trillion bond issuance this week, marking its first major act of fiscal stimulus to support a sluggish economic recovery. Investors are now looking ahead to China's industrial production and retail sales data, due later on Friday, for more insight into the world's largest oil importer.
