Oil stabilises as signs of economic slowdown clash with Fed rate cut hopes; brent crude at $85.09/bbl
By 11:41 a.m. EDT (1541 GMT), Brent futures had edged up by 1 cent to $85.09 a barrel, while U.S. West Texas Intermediate (WTI) crude increased by 6 cents to $82.91. Both benchmarks had recorded gains in the previous session.
Oil price today: Brent futures had edged up by 1 cent to $85.09 a barrel, while U.S. West Texas Intermediate (WTI) crude increased by 6 cents to $82.91.
Oil prices remained largely unchanged on Thursday as investors grappled with conflicting signals about crude demand. Concerns about a potential economic slowdown in the U.S. were balanced by rising expectations that the Federal Reserve might soon cut interest rates.
By 11:41 a.m. EDT (1541 GMT), Brent futures had edged up by 1 cent to $85.09 a barrel, while U.S. West Texas Intermediate (WTI) crude increased by 6 cents to $82.91. Both benchmarks had recorded gains in the previous session.
“Crude Oil prices have recovered from above key support levels with NYMEX crude recovering from $79-$79.5 and MCX crude from above 6700, both up more than 3.5% from recent lows, supported by a larger-than-expected drawdown in weekly oil stocks in U.S. – amid signs of higher demand and additionally supported by a weaker U.S. dollar,” said Pranav Mer, VP – Research (Commodity & Currency) BlinkX and JM Financial.
What’s weighing on crude oil prices?
The number of Americans filing new applications for unemployment benefits exceeded expectations last week. Initial claims for state unemployment benefits rose by 20,000 to 243,000 for the week ending July 1, adjusted for seasonal variations.
This data reinforces the argument for the Fed to consider rate cuts as soon as this month, potentially stimulating increased spending on oil. However, the uptick in jobless claims also indicates an economic slowdown that could potentially dampen crude demand, according to John Kilduff, a partner at Again Capital in New York.
Chinese economic growth contributed to a decline in oil prices. On Thursday, Chinese leaders indicated their commitment to current economic policies, though specifics were limited. These signals tempered investor expectations of increased consumption efforts in the world’s second-largest economy.
However, anticipation of potential interest rate cuts by the U.S. Federal Reserve prompted some trading activity and prevented oil prices from falling further.
On Wednesday, Federal Reserve officials indicated that the U.S. central bank is nearing a decision to lower interest rates, encouraged by improving inflation trends and a more balanced labor market. This development could pave the way for a rate cut in September.
According to a Fed report released on Wednesday, U.S. economic activity showed slight to modest expansion from late May to early July, with businesses anticipating slower growth in the near future.
