On Thursday, oil prices slightly declined, retreating from multi-month highs as traders grew cautious ahead of important U.S. inflation data due later in the day. Concerns over weak Chinese demand also persisted. The main obstacle to the oil price climb was the strength of the dollar, as markets were betting on a minor increase in …
On Thursday, oil prices slightly declined, retreating from multi-month highs as traders grew cautious ahead of important U.S. inflation data due later in the day. Concerns over weak Chinese demand also persisted. The main obstacle to the oil price climb was the strength of the dollar, as markets were betting on a minor increase in U.S. inflation ahead of Thursday’s consumer price index report. However, despite data showing that U.S. gasoline demand remained strong, oil prices were still trading close to their highest levels of the year.
By 21:11 ET (01:11 GMT), Brent oil prices had decreased 0.2% to $87.39 per barrel and West Texas Intermediate crude futures had decreased 0.2% to $84.25 per barrel. On Wednesday, WTI reached its highest point since November 2022, while Brent reached a six-month high. Before important U.S. consumer price index statistics were scheduled to be released later in the day, sentiment was generally tense. Markets were nervous as analysts predicted a somewhat higher reading for July, which may show that inflation remained sticky and high, well beyond the Federal Reserve’s goal range of 2% annually. High inflation is anticipated to provide the Fed greater motivation to keep its hawkish attitude; however, this scenario could have a negative impact on economic activity for the rest of the year and lower oil consumption. The likelihood of longer-term increases in rates has also helped the dollar in recent weeks. Oil costs more for international customers when the dollar is stronger.
A significantly larger-than-expected drop in petrol and distillate stockpiles was also revealed in the data released on Wednesday, which also indicated an unexpected increase in U.S. inventories in the week ending August 4. The results demonstrated that despite increasing interest rates and inflation, fuel demand among the world’s greatest fuel consumer remained strong. As a result of Saudi Arabia’s and Russia’s prolonged supply cuts, the reading further raised expectations that the world’s oil markets will tighten even more in the upcoming months. Concerns about a rebound in demand in the largest oil importer in the world increased as a result of a string of poor economic indicators from China. In July, as the post-COVID economic rebound lost pace, China’s oil imports fell to their second-lowest level of the year. However, Beijing is now anticipated to implement additional stimulus measures in the upcoming months, which could help push up economic activity and oil consumption in the nation.
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