Oil prices rise ahead of US inflation data, a day following it fell below $100 a barrel.
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Oil prices rise on anticipation ahead of US inflation data
Oil prices rose on Wednesday, a day following falling below $100 a barrel, for the first time since last April, but gains were limited amid anticipation ahead of US inflation data that might weaken the market.
Brent crude futures rose 45 cents, or 0.5%, to $ 99.97 a barrel, by 06:30 GMT. US West Texas Intermediate crude rose 44 cents, or 0.5%, to $95.27.
Investors fear that sharp increases in interest rates, in order to curb inflation, will lead to a severe slowdown in economic activity and damage the demand for oil.
Prices fell more than 7%, on Tuesday, in volatile trading.
Another concern is the dollar’s rise due to higher US interest rates, which might also undermine oil prices.
“Recession fears continue to hurt the market, while a stronger US dollar and a rise in COVID-19 cases in parts of China certainly aren’t helping,” said Warren Patterson, head of commodity strategy at ING.
Economists polled by Archyde.com expect the data to show inflation accelerating in the United States to 1.1% on a monthly basis, and 8.8% on an annual basis.
Oil is generally priced in dollars. Therefore, the appreciation of the US currency makes it more expensive for holders of other currencies, which leads to downward pressure on demand.
Also, the re-imposition of restrictions on movement to confront “Covid-19” in China affected the market, as a number of cities in the second largest economy in the world have adopted new restrictions, including the closure of companies and broader closures, in an attempt to curb new infections with a highly contagious sub-mutant. from the Corona virus.
US crude stocks rose by 4.8 million barrels in the week ending July 8, and gasoline stocks increased by three million barrels, while distillate stocks rose by 3.3 million barrels, according to market sources, citing figures from the American Petroleum Institute.
And “OPEC” expected, in a monthly report issued yesterday, Tuesday, that global demand for oil will rise in the year 2023, and that pressure on supplies in the market will continue, as it estimated that there is a need to pump an additional 900,000 barrels per day of oil from its members in 2023 to achieve a balance in market.
