Oil records weekly gain of over 3 percent over positive economic date, rate cut anticipations
Date
8/11/2024 8:22:39 AM
(MENAFN) On Friday, oil prices closed higher, marking a notable weekly gain of over 3.5 percent due to a combination of positive economic data and indications from Federal Reserve policymakers about potential interest rate cuts. brent crude futures ended the day up by 50 cents, or 0.6 percent, reaching USD79.66 per barrel, while US West Texas Intermediate (WTI) crude futures increased by 65 cents, or 0.9 percent, settling at USD76.84 per barrel. The gains for the week were substantial, with Brent rising more than 3.5 percent and WTI climbing over 4 percent. This upward trend was supported by remarks from several Federal Reserve officials who expressed growing confidence that inflation might be under control enough to warrant a rate cut as early as September. Additionally, a larger-than-expected decline in US jobless claims contributed to the positive outlook, suggesting that concerns about a deteriorating labor market were unfounded and that the labor market's gradual softening was proceeding as anticipated.
The oil market's recovery was further bolstered by a rise in China’s consumer price index, which increased at a slightly faster pace than anticipated last month. However, supply risks remain a concern due to ongoing fears of an escalating conflict in the Middle East. This geopolitical tension continues to weigh on supply forecasts and supports higher prices.
In the liquefied natural gas (LNG) sector, Asian spot prices reached their highest level in over seven months, reflecting European price increases amid supply disruption concerns. The average LNG price for September delivery into northeast Asia stood at USD12.90 per mmBtu, up from USD12.80/mmBtu the previous week. Despite tepid demand in northeast Asia, influenced by limited consumption in South Korea and a few unplanned nuclear outages, European market gains have driven up prices.
In Europe, natural gas prices have also risen due to heightened geopolitical risks in the Middle East and a surprise incursion by Ukraine into Russia’s Kursk region, impacting Russian natural gas flows into Ukraine. In the US, natural gas futures reached a two-week high on Friday, driven by forecasts predicting hotter weather and increased demand for the coming week.
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