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Oil Gets a Boost from US, but Asia Weighs on Rally

26 Jul 2024 , 09:25 AM

Oil prices rose slightly on Friday following stronger-than-expected economic statistics from the United States, which reinforced market expectations for increased crude oil demand from the world’s largest energy user.

However, fears about lacklustre economic circumstances in Asia’s largest nations, China and Japan, limited gains.

Brent crude futures for September increased 7 cents to $82.44 per barrel. September West Texas Intermediate crude jumped by 4 cents to $78.32 a barrel.

The US economy expanded at a faster-than-expected annualised pace of 2.8% in the second quarter, as consumers spent more and firms raised investments, according to Commerce Department data. Reuters polled economists, who expected that the United States’ GDP would expand by 2.0% over the period.

At the same time, inflationary pressures lessened, maintaining expectations that the Federal Reserve would drop interest rates in September. Lower interest rates tend to stimulate economic activity, which can drive up oil consumption.

Nonetheless, ongoing signals of turmoil in areas of Asia capped oil price advances.

Core consumer prices in Japan’s capital increased 2.2% in July from a year earlier, according to data released on Friday, boosting market expectations of an interest rate hike in the near future.

However, an index that excludes energy prices, which is regarded as a better indicator of underlying pricing trends, climbed at the weakest annual rate in nearly two years, implying that price increases are slowing due to weak consumption.

China, the world’s largest crude importer, startled markets for the second time this week by launching an unannounced lending operation on Thursday at significantly lower rates, implying that officials are attempting to offer further monetary stimulus to support the economy.

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Related Tags

  • Brent
  • oil
  • WTI
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