Brent oil stays above $80 as inflation concerns ease.
Oil Prices Rise as China Boosts Economic Growth and Fed Expected to Stop Raising Interest Rates
By Natalie Grover
Global oil benchmark Brent is currently trading above $80, driven by China’s commitment to stimulate economic growth and the anticipation that the U.S. Federal Reserve will soon halt its interest rate hikes.
Brent futures are up 38 cents at $80.01 a barrel, while U.S. West Texas Intermediate (WTI) crude has risen by 20 cents to $75.95 per barrel.
China’s top economic planner has announced plans to boost consumption in the country, which could lead to increased oil demand.
In the U.S., retail sales for June were lower than expected, raising expectations that the Federal Reserve will pause its rate hikes after the anticipated 25 basis-point increase at its upcoming meeting.
Higher interest rates can hinder economic growth and reduce oil demand.
Furthermore, European Central Bank (ECB) governing council member Klaas Knot has suggested that future rate hikes are not guaranteed.
Positive inflation data from Canada and the United Kingdom, indicating a cooling trend, has also contributed to the positive sentiment.
“Traders have become more optimistic as inflation eases off… any improvement in the inflation data also means an improvement in oil demand,” said Naeem Aslam, chief investment officer at Zaye Capital Markets.
On the supply side, the American Petroleum Institute (API) reported a decline in crude oil, gasoline, and distillate inventories last week.
PVM analyst John Evans noted that the API report was one of the main reasons for the market’s calm opening, despite the crude draw being lower than expected.
Meanwhile, Russia plans to reduce its oil exports by 2.1 million metric tons in the third quarter, aligning with its voluntary export cuts of 500,000 barrels per day in August, according to the energy ministry.
(Reporting by Natalie Grover in London; Additional reporting by Katya Golubkova in Tokyo and Trixie Yap in Singapore; Editing by Jamie Freed, David Holmes and Sharon Singleton)
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