By Adedapo Adesanya
The price of Brent crude benchmark settled above $85 on Thursday as oil prices rose for the second consecutive session amid rising hopes of interest rate cuts in the United States after data showed an unexpected slowdown in inflation.
The oil grade appreciated by 32 cents or 0.4 per cent to settle at $85.40 per barrel and the US West Texas Intermediate (WTI) crude futures appreciated by 52 cents or 0.6 per cent to $82.62 a barrel.
Data showed that US consumer prices which measure inflation fell in June, stoking hopes the Federal Reserve will cut rates soon.
The consumer price index dipped 0.1 per cent last month, the first drop since May 2020, after being unchanged in May, the US Labor Department’s Bureau of Labor Statistics said on Thursday. In the 12 months through June, the CPI climbed 3.0 per cent, the smallest gain since June 2023. That followed a 3.3 per cent advance in May.
The annual increase in consumer prices has slowed from a peak of 9.1 per cent in June 2022. The CPI report followed news last week that the unemployment rate rose to a 2-1/2-year high of 4.1 per cent in June from 4.0 per cent in May.
US Federal Reserve Chairman, Mr Jerome Powell recognised the improved trend in price pressures but told legislators this week that he was not yet ready to proclaim inflation had been defeated and that “more good data” would bolster the argument for interest rate decreases.
Market analysts noted that slowing inflation and interest rate cuts will likely spur more economic activity.
The data pulled the US Dollar index lower and this also supported oil prices. A softer greenback can lift demand for Dollar-denominated oil from buyers using other currencies.
US data published on Wednesday revealed a draw in crude stockpiles in the world’s largest oil market, as well as dropping inventories and high demand for petrol and jet fuel.
In its monthly oil market report, the International Energy Agency (IEA) saw global demand growth slowing to under a million barrels a day this year and next, mainly reflecting a contraction in China’s consumption.
Still, the Organisation of the Petroleum Exporting Countries (OPEC) in its monthly report on Wednesday kept forecasts for world demand growth unchanged, at 2.25 million for this year and 1.85 million barrels per day next year.