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Crude oil futures rose for a second straight session on Thursday as a softer-than-expected U.S. inflation reading raised the chances of a Fed interest rate cut in September.
The US government reported that the consumer price index fell 0.1% in June, falling for the first time since May 2020, and the core CPI – which excludes volatile food and energy prices – rose just 0.1%.
Analysts generally believe that slower inflation and interest rate cuts should stimulate greater economic activity, supporting rising oil prices.
“While we have difficulty connecting a potential rate cut to higher oil demand, the favorable news on the inflation front seems sufficient to maintain speculative interest on the long side of energy futures,” Ritterbusch analysts said. wroteaccording to Dow Jones.
Traders also weighed the latest data monthly oil report from the International Energy Agency, which made minor changes to its demand growth outlook, raising its 2024 estimate by 10,000 bbl/day to 970,000 and cutting its 2025 forecast by 20,000 bbl/day to 980,000.
Demand growth in the second quarter slowed to 710,000 bbl/day, the lowest quarterly increase in more than a year, the IEA said, as oil consumption in China contracted in both April and May, while demand for industrial fuels and petrochemical feedstocks was particularly weak.
Nymex front-month crude (CL1:COM) for August delivery settled +0.6% Brent crude oil due next month (CO1:COM) closed at $82.62 a barrel +0.4% up to $85.40 a barrel.
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The IEA's forecasts remain well below the more optimistic outlook from OPEC, which earlier this week left its 2024 and 2025 demand growth forecasts unchanged at 2.2 million bbl/day and 1.8 million bbl/day, respectively.
The IEA and OPEC demand forecasts are “further apart than usualpartly due to differences of opinion on the pace of the global transition to clean fuels,” StoneX analysts said, according to Market clock.
