Oil prices rise after US economic data strengthens rate cut expectations

Brent had touched an intra-day low of $81.05 on Wednesday

By Reuters

  • Follow us on
  • google-news
  • whatsapp
  • telegram

 

Published: Thu 16 May 2024, 9:35 PM

Oil futures edged up on Thursday on a stabilizing US job market and slower-than-expected inflation data, which increased expectations that the Federal Reserve would begin to cut interest rates in the fall.

Brent crude futures were up 32 cents at $83.07 a barrel by 1:00 p.m. EDT (1700 GMT). US West Texas Intermediate crude (WTI) gained 44 cents to $79.07.


The number of Americans filing new claims for unemployment benefits fell last week by 10,000 to a seasonally adjusted 222,000, the US Labor Department said, pointing to both an underlying strength and a steadying of the labor market.

“Even though the jobless claims were low, the report was weak enough that it’s going to allow the Fed to get in and cut,” said John Kilduff of Again Capital LLC. “The strong employment trends do portend strong gasoline demand as we look out, even though it has been lackluster.”


US consumer prices, meanwhile, were up less than expected in April in a boost to financial market expectations for a September cut to interest rates by the Federal Reserve, which could temper dollar strength and make oil more affordable for holders of other currencies.

Brent had touched an intra-day low of $81.05 on Wednesday - the lowest the front-month futures contract has traded since Feb. 26 - but recovered to about 0.5 per cent higher on the day on mixed US oil inventory data that has limited oil prices.

US crude oil, gasoline and distillate inventories fell, reflecting a rise in both refining activity and fuel demand, Energy Information Administration (EIA) data showed.

Crude inventories dropped by 2.5 million barrels to 457 million barrels in the week ended May 10, the EIA said, versus the 543,000 barrel consensus analyst forecast in a Reuters poll.

Gasoline demand, however, continued to land under 9 million barrels a day for a sixth straight week, below what is typical heading into the summer driving season.

“This increase in the runs that will likely persist into early next month will be going head to head with continued weak product demand that is showing no sign of improvement,” said Jim Ritterbusch of Ritterbusch and Associates.


More news from Business