On Thursday, oil prices rallied amid hopes of a Federal Reserve (Fed) interest rate cut, supporting traders over sluggish demand fears.
In the Asian afternoon session, Brent futures for October contracts rose by 0.30% to $80.00 per barrel. The US benchmark West Texas Intermediate (WTI) futures for September delivery rose by 0.36% to $77.26 a barrel.
Moreover, a slew of weak US inflation readings has boosted traders’ bets that the Fed will reduce rates starting in September. Investors anticipate that the possible cut will aid oil demand concerns.
In addition, some aspects of risk premium persisted in the oil markets following reports that Hamas and Hezbollah had launched attacks against Israel this week. Attention was mainly focused on the potential for a strike by Iran.
Meanwhile, Wednesday’s consumer price index (CPI) inflation data, which was softer-than-anticipated, has also fueled hopes for a 25-basis point rate cut next month.
Furthermore, the possibility of lower rates prompted some to bet that US economic conditions will improve in the coming months. This optimism is expected to boost demand in China.
US Stockpile, China Mixed Economic Data Favors Oil
According to reports, oil surged amid unexpected US crude stockpile and mixed economic readings in China.
Government data revealed on Wednesday that US oil inventories increased by over 1.4 million barrels (MB), better than the anticipated 1.9 MB draw.
A slew of economic readings from China also supported oil markets on Thursday.
Reports show retail sales surged more than expected last month, rising after the country revealed rate reductions and measures aimed at growing consumption.
However, the Chinese industrial output was boosted less than anticipated, and so was fixed asset investment. Furthermore, China’s unemployment rate has unexpectedly climbed.
Meanwhile, sluggish demand for Beijing has been a crucial factor in jitters for oil markets, mainly as China faces challenges with a slow economic recovery.
