Crude Oil News Today: US Inflation Drop Fuels Price Rise, Weekly Loss Looms

Oil Prices Edge Up on US Inflation Data

U.S. crude futures rose slightly on Friday, buoyed by signs of easing inflation in the United States. Despite this uptick, both Brent and WTI contracts are on track for weekly losses.

At 11:28 GMT, Light Crude Oil futures are trading $83.37, up $0.75 or +0.91%.

US Inflation and Fed Policy

Thursday’s data revealed a drop in U.S. consumer prices for June, sparking hopes for potential interest rate cuts by the Federal Reserve. Lower rates typically boost economic growth and fuel consumption. However, Fed Chair Jerome Powell emphasized the need for more data before considering rate reductions.

Strong Summer Fuel Demand

U.S. gasoline demand hit 9.4 million barrels per day in the week ending July 5, the highest for Independence Day week since 2019. Jet fuel demand also showed strength, reaching its highest four-week average since January 2020. This robust consumption has prompted U.S. Gulf Coast refiners to increase crude oil processing.

Conflicting Global Demand Forecasts

The International Energy Agency (IEA) cut its demand growth forecast, citing factors such as sluggish economic expansion and increased electric vehicle adoption. In contrast, OPEC maintained a more optimistic outlook, expecting global oil demand to rise by 2.25 million bpd in 2024.

Chinese Economic Challenges

China, the world’s largest oil importer, continues to face economic headwinds. Factory-gate prices are still declining, indicating persistent deflationary pressures. This follows earlier signs of reduced crude appetite from some Chinese refiners.

Middle East Tensions Ease

The week began with oil prices retreating as potential ceasefire negotiations in Gaza reduced Middle East tensions. However, significant gaps remain between negotiating parties, maintaining some uncertainty in the market.

Short-Term Forecast:  Cautiously Bullish

The short-term outlook for oil prices remains cautiously bullish. While strong U.S. fuel demand and potential Fed rate cuts support prices, concerns about global economic growth, particularly in China, may limit significant gains. Traders should watch for further developments in U.S. economic data and Middle East negotiations, which could sway market sentiment in the coming weeks.

Technical Analysis

After starting the week under pressure, the late rebound has put the crude oil market within striking distance of last week’s high at $84.52. Initially, this level could provide resistance, but overcoming it could trigger a surge into the April top at $86.24.

Short-term support is $80.83 and $79.16. While the 50-day moving average at $78.95 and the 200-day moving average at $77.54 remain flat, they are both significantly influencing the bullish price action.