Crude oil prices climb over 3.5 per cent on Fed rate cut hopes

WEB DESK: Oil prices ended higher on Friday, marking a weekly gain of over 3.5 per cent as encouraging economic data and indications from Federal Reserve policymakers about possible interest rate cuts in September alleviated concerns about demand.

At the same time, ongoing fears of escalating conflict in the Middle East continued to raise concerns about supply disruptions.

Brent crude futures settled at $79.66 per barrel, up by 50 cents or 0.6 per cent, while U.S. West Texas Intermediate (WTI) crude futures closed at $76.84 per barrel, up by 65 cents or 0.9 per cent. For the week, Brent crude increased by more than 3.5 per cent, and WTI gained over 4 per cent.

Dennis Kissler, Senior Vice President of Trading at BOK Financial, commented, “Crude oil is experiencing a recovery phase. Geopolitical tensions remain a supportive factor, and while recession concerns have been somewhat mitigated, they are not completely gone.”

On Thursday, a group of Federal Reserve policymakers expressed increased confidence that inflation is moderating enough to justify potential rate cuts. Additionally, a larger-than-expected decrease in U.S. jobless claims last week suggested that the labour market remains resilient, easing fears of an economic downturn.

Chinese inflation data, which showed a slightly faster-than-expected increase in the consumer price index last month, also provided support to oil prices. Given this positive economic backdrop, it is plausible that oil prices may approach the $80 per barrel mark.

Furthermore, rising geopolitical tensions in the Middle East continue to contribute to supply fears, bolstering oil prices as concerns persist about potential disruptions to regional production.

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