Oil prices steady on strong US GDP, but set for third week in red

Investing.com– Oil prices steadied in Asian trade on Friday, taking some support from positive U.S. gross domestic product data, but concerns over sluggish demand conditions in Asia put crude on course for a third week of losses.

Brent oil futures expiring in September steadied at $82.38 a barrel, while West Texas Intermediate crude futures rose slightly to $81.41 a barrel by 21:07 ET (01:07 GMT).

Strong US GDP, rate cut hopes offer some support 

Gross domestic product data showed on Thursday that the U.S. economy grew more than expected in the second quarter, despite pressure from high rates and relatively sticky inflation.

The reading drove up hopes that the world’s biggest fuel consumer was headed for a “soft landing,” where economic growth remained steady while inflation eased. 

This notion sparked increased optimism over a potential interest rate cut by the Federal Reserve in September. PCE price index data- the Fed’s preferred inflation gauge- is set to offer more cues on this front on Friday. The reading comes just days before a Fed meeting where some officials have called on the bank to begin cutting rates.

Data showing steady drawdowns in U.S. oil inventories also offered some positive cues to oil markets, as fuel demand in the country remained robust amid the travel-heavy summer season. 

Oil set for third straight week of losses

Still, Brent was down about 0.3% this week, while WTI was set to lose nearly 2% amid persistent concerns over slowing growth and demand in top importer China. 

Beijing unexpectedly cut a swathe of lending rates this week, further trying to loosen monetary policy amid growing concerns over sluggish growth in the country. 

Oil’s downturn was in part triggered by GDP data from last week, which showed the Chinese economy grew less than expected in the second quarter. 

Apart from China, uncertainty over Japan also grew following middling inflation data from Tokyo

A softer-than-expected reading on core inflation saw investors doubt whether the Bank of Japan will have enough headroom to hike interest rates next week. Any delay in a hike reflects lesser confidence in the Japanese economy. 

Speculation over a ceasefire between Israel and Hamas also weighed on oil prices, amid reports from the White House stating that the U.S. was close to brokering a deal. This kept traders from pricing in a risk premium into oil prices.

This post is originally published on INVESTING.

  • Related Posts

    UBS raises USD/PLN forecast amid Trump’s potential impact

    UBS revised its quarter-end forecasts for the US dollar against the Polish zloty (USDPLN), citing a range of factors including the potential challenges Europe and Poland may face from Donald…

    Exclusive-Aramco chief expects additional oil demand of 1.3 million bpd this year

    By Marwa Rashad DAVOS, Switzerland (Reuters) -Saudi oil giant Aramco (TADAWUL:2222)’s Chief Executive Amin Nasser said on Tuesday he sees the oil market as healthy and expects an additional 1.3…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    UBS raises USD/PLN forecast amid Trump’s potential impact

    • January 21, 2025
    UBS raises USD/PLN forecast amid Trump’s potential impact

    Exclusive-Aramco chief expects additional oil demand of 1.3 million bpd this year

    • January 21, 2025
    Exclusive-Aramco chief expects additional oil demand of 1.3 million bpd this year

    Factbox-European companies exposed as Trump takes aim at US offshore wind

    • January 21, 2025
    Factbox-European companies exposed as Trump takes aim at US offshore wind

    Oil slips as traders digest Trump tariff reprieve, plan to boost US oil output

    • January 21, 2025
    Oil slips as traders digest Trump tariff reprieve, plan to boost US oil output

    Gold Prices Boosted After Trump’s Inauguration. Forecast as of 21.01.2025

    • January 21, 2025
    Gold Prices Boosted After Trump’s Inauguration. Forecast as of 21.01.2025

    Exclusive-Aramco chief tells Davos he expects additional oil demand of 1.3 million bpd this year

    • January 21, 2025
    Exclusive-Aramco chief tells Davos he expects additional oil demand of 1.3 million bpd this year