Friday’s strong labour data raised fears of higher U.S. interest rates, but oil prices remain range-bound and could rise for a second straight week on signs of tight supply and rising demand. expensive.
According to data released on Thursday, U.S. stockpiles decreased more than anticipated in the week leading up to June 30. A large decline in gasoline inventories was pointed to increased fuel consumption during the summer travel season.
After private payrolls data revealed a robust U.S. labour market, fueling concerns that the Federal Reserve will maintain its hawkish stance in raising interest rates, the reading helped crude prices settle steadily on Thursday, mostly avoiding panic in broader global markets.
Brent oil futures were trading unchanged at $76.81 per barrel at the time of writing, while West Texas Intermediate crude futures were holding steady at $72 per barrel. For the week, both contracts were expected to increase by between 1.7% and 2.3%.
Oil supported by constrained supplies
The reduction in U.S. inventories also follows Saudi Arabia’s announcement that it will maintain a 1 million barrels per day (bpd) supply cut until the end of August and maybe beyond.
The production cuts went into effect in early July. Russia also announced in August that it would cut crude oil exports by 500,000 barrels per day.
The production cuts are in addition to supply cuts by the Organization of the Petroleum Exporting Countries earlier this year, which are primarily aimed at tightening global oil markets and supporting oil prices.
Analysts now generally expect oil markets to tighten for the remainder of the year, with prices likely to remain at the bottom. However, a sharp rise in oil prices is also at risk given the deteriorating macroeconomic outlook. China economy slows, Fed fears oil price gains will be capped
A string of weaker-than-expected economic data released by China has heightened concerns over whether the country can facilitate a recovery in oil demand this year.
In addition to China, rising interest rates in the US may also weigh on economic activity this year, pushing oil demand and oil prices down. Thursday’s strong jobs data capped off a series of hawkish signals given by the Fed last week.
