International oil prices rose for the third consecutive day on the 12th (local time) as U.S. inflation appeared to ease, supporting expectations for an interest rate deduction.
On the same day, West Texas Intermediate (WTI) crude for July closed at $78.50 per barrel on the New York Mercantile Exchange (NYMEX), up $0.60 (0.77%) from the previous day. Brent crude for August delivery on the London ICE Futures Exchange was calculated at $82.60 per barrel, an increase of $0.68 (0.83%).
Following the regular Federal Open Market Committee (FOMC) meeting, the Federal Reserve announced that it had decided to maintain the benchmark interest rate at the current 5.25-5.50% as expected. However, in the economic outlook announced the same day, the forecast for interest rate deduction within the year was lowered from three times to once.
Despite this hawkish decision by the Federal Reserve, the market was relieved by the slowdown in consumer prices revealed the same day. The U.S. Department of Labor announced that the U.S. Consumer Price Index (CPI) in May increased by 3.3% compared to the same month last year. This is a decrease from the April increase rate (3.4%), easing concerns about inflation that had been high since the beginning of the year. According to the FedWatch tool of the Chicago Mercantile Exchange (CME), the possibility of a 0.25 percentage point interest rate cut in September was adjusted upward from 46.8% the previous day to 61.5%.
The U.S. Energy Information Administration (EIA) announced that oil stocks increased by 3.73 million barrels in the week ending on the 7th. Also, the International Energy Agency (IEA) lowered its prediction for global oil demand growth this year from 1.1 million barrels per day to 960,000 barrels.
Dennis Kessler of BOK Financial told the Wall Street Journal (WSJ), “The IEA’s claim of a massive oil surplus by 2030 is negatively impacting oil prices,” but added, “Traders are cautiously taking this into account as they see global refining demand still exists and the growth of electric vehicles is expected to slow.”
Most Commented