Global oil prices record modest increase

WEB DESK: On Friday, global oil prices experienced an uptick due to indications of easing inflationary pressures in the United States, the world’s largest oil consumer. Brent crude futures rose by 52 cents, or 0.6 per cent, reaching $85.92 per barrel, while US West Texas Intermediate (WTI) crude climbed 73 cents, or 0.9 per cent, to $83.35 per barrel.

Despite this increase, Brent crude is projected to see a weekly decline of approximately 1 per cent, following four consecutive weeks of gains, whereas WTI prices have remained largely stable.

Investor optimism was bolstered by Thursday’s data showing a decline in US consumer prices for June, which sparked speculation regarding potential interest rate cuts by the Federal Reserve.

Lower interest rates could stimulate economic growth, thereby increasing fuel consumption. However, Fed Chair Jerome Powell emphasised the need for further data before confirming any rate reductions.

Market strategist Yeap Jun Rong noted that while cooling inflation may prompt earlier policy easing, it also highlights a series of disappointing economic indicators, suggesting a potential weakening of the US economy.

Additionally, strong summer fuel demand in the US has further supported oil prices, with gasoline consumption reaching 9.4 million barrels per day (bpd) for the week ending July 5—the highest since 2019. Jet fuel demand also marked its strongest levels since January 2020.

However, analysts caution that the market may remain constrained by contrasting forces, including the expectation of recovery in fuel demand against persistent economic uncertainties. Emril Jamil, a senior oil analyst at LSEG, remarked on the market’s indecisiveness due to these opposing influences.

Meanwhile, US refiners have increased production, with net crude input from Gulf Coast refiners exceeding 9.4 million bpd—the highest since January 2019.

Nonetheless, weakening demand signals from China, the largest oil importer, could dampen the positive outlook, as June crude imports from China fell by 11 per cent year-on-year, according to oil broker Tamas Varga.

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