Oil prices rose on Wednesday, with Brent even breaching the symbolic threshold of $80 a barrel, after the release of US inflation data gave the Fed more room to rein in its rate hikes.
At around 3:15pm French time, a barrel of North Sea Brent for September delivery was up 0.54% at $79.84 after rising as high as $80.05, a record high of more than two months.
Its US equivalent, a barrel of West Texas Intermediate (WTI) for August delivery, gained 0.90% to $75.50 after hitting $75.60, also its highest price since early May.
Further slowdown in inflation in the US
Inflation again slowed down sharply in June in the United States, to 3.0% annually compared to 4% the previous month, thus reaching its lowest level since March 2021, according to the CPI index published this Wednesday by the Department of Job.
The dollar wobbled immediately after the data was released as the market increasingly believed the end of the Fed’s rate hike cycle was nearing.
However, the depreciation of the US currency encourages dollar-denominated oil purchases, making them more attractive to buyers using other currencies by increasing their purchasing power.
New rate hikes in the year
And inflation remains above the Fed’s 2% target.
While oil prices have been affected in recent months by macroeconomic considerations, with the risk of recession around the world weighing on demand prospects, many analysts are also concerned that supply will shrink further.
And “last week’s announcements from Saudi Arabia help,” said Warren Petterson. The world’s largest exporter has stepped up its efforts to voluntarily limit its production, announcing the extension of its cuts until the end of August at the same time that Moscow, another heavyweight in the market, increased its own.
Source: BFM TV
