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Oil rates surge on Friday due to robust US retail sales data
(MENAFN) Oil prices saw an uptick on Friday as investors anticipated an increase in demand from the world's largest oil consumer, bolstered by robust US retail sales data released on Thursday. The international oil benchmark, brent crude, rose by 0.03 percent to USD74.19 per barrel at 11:23 AM local time (08:23 GMT), a slight increase from the previous session's closing price of USD74.17. Meanwhile, the US benchmark West Texas Intermediate (WTI) experienced a more significant rise of 0.8 percent, reaching USD69.60 per barrel, compared to USD70.18 at the end of the prior session.
The increase in oil prices was influenced by a 0.4 percent rise in US retail sales in September, bringing the total to USD714.4 billion. Analysts noted that this growth strengthens the perception that the US economy is maintaining its momentum in the third quarter, suggesting healthy consumer spending. Additionally, the number of initial jobless claims in the US fell to 241,000 for the week ending October 12, which was below market expectations and indicated a cooling labor market since its post-pandemic peak.
Market expectations are also leaning toward a reduction in the US Federal Reserve's policy rate by 25 basis points in the upcoming month, with an overall decrease of 50 basis points anticipated across the two remaining meetings of the year. This potential shift in monetary policy could further impact economic activity and oil demand.
On the global front, the Chinese government's announcement of measures aimed at revitalizing its struggling real estate sector also provided support for oil prices. Housing and Urban-Rural Development Minister Ni Hong revealed plans to expand a "white list" of housing projects eligible for financing and to increase bank lending for these developments to USD562 billion by the end of the year. Given that China is the world’s largest oil importer, these initiatives are expected to alleviate concerns regarding oil demand, potentially stabilizing and supporting prices in the market.
The increase in oil prices was influenced by a 0.4 percent rise in US retail sales in September, bringing the total to USD714.4 billion. Analysts noted that this growth strengthens the perception that the US economy is maintaining its momentum in the third quarter, suggesting healthy consumer spending. Additionally, the number of initial jobless claims in the US fell to 241,000 for the week ending October 12, which was below market expectations and indicated a cooling labor market since its post-pandemic peak.
Market expectations are also leaning toward a reduction in the US Federal Reserve's policy rate by 25 basis points in the upcoming month, with an overall decrease of 50 basis points anticipated across the two remaining meetings of the year. This potential shift in monetary policy could further impact economic activity and oil demand.
On the global front, the Chinese government's announcement of measures aimed at revitalizing its struggling real estate sector also provided support for oil prices. Housing and Urban-Rural Development Minister Ni Hong revealed plans to expand a "white list" of housing projects eligible for financing and to increase bank lending for these developments to USD562 billion by the end of the year. Given that China is the world’s largest oil importer, these initiatives are expected to alleviate concerns regarding oil demand, potentially stabilizing and supporting prices in the market.
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