Easing Inflation Pressures, Strong Summer Travel Lift Oil Prices

12 Jul 2024 , 09:34 AM

Oil prices surged in early Asian trading hours on Friday as hints of strong summer demand and easing inflationary pressures in the world’s largest oil market, the United States, boosted investor sentiment.

Brent crude futures increased 37 cents, or 0.4%, to $85.77 per barrel. US West Texas Intermediate oil futures increased 50 cents, or 0.6%, to $83.12 per barrel.

Both contracts had climbed in the previous two sessions, although Brent futures were expected to fall about 1% week on week following four straight weeks of gains. WTI futures were basically unchanged on a weekly basis.

U.S. petrol consumption was 9.4 million barrels per day (bpd) in the week ending July 5, the highest for a week that included the Independence Day vacation since 2019, according to government statistics released on Wednesday. According to the data, jet fuel demand was at its highest level over the last four weeks since January 2020.

Strong gasoline demand prompted U.S. refiners to increase production and draw from crude oil inventories, thereby increasing prices. According to government data, U.S. Gulf Coast refiners’ net crude input increased to more than 9.4 million bpd last week, the highest level since January 2019.

WTI front-month futures have posted their biggest premium to the next-month contract since April, indicating near-term supply tightness.

U.S. government statistics released on Thursday showed a surprise drop in consumer prices in June, raising chances that the Federal Reserve could slash interest rates shortly.

The US dollar index fell for the third straight session on Friday, as market investors increased their bets on a September interest rate cut.

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