Oil prices down for week, US consumer sentiment weaker
Business
Brent fell more than 1.7pc after four weeks of gains. WTI posts 1.1pc weekly decline
NEW YORK (Reuters) – Oil futures prices settled slightly lower on Friday as investors weighed weaker US consumer sentiment against mounting hopes for a Federal Reserve rate cut in September.
Brent crude futures settled 37 cents lower to $85.03 a barrel. US West Texas Intermediate (WTI) crude futures fell 41 cents, or 0.5 per cent, to close at $82.21 a barrel.
For the week, Brent futures fell more than 1.7pc after four weeks of gains. WTI futures posted 1.1pc weekly decline.
A monthly survey by the University of Michigan showed US consumer sentiment fell to an eight-month low in July, although inflation expectations improved for the next year and beyond.
The US Labour Department said the producer price index (PPI) rose 0.2pc in June, slightly more than expected, as the cost of services climbed. Still, investors expect the Fed could start cutting rates in September.
"The market isn't afraid of the Fed at this point," said Phil Flynn, an analyst at Price Futures Group.
Lower US interest rates are expected to boost economic growth, which could boost fuel consumption.
"Cooling US inflation numbers may support the case for the Fed to kick-start its policy easing process earlier rather than later," said Yeap Jun Rong, market strategist at IG.
"It also adds to the series of downside surprises in US economic data, which points to a clear weakening of the US economy," he added.
Oil prices have drawn some support from US gasoline demand, which government data showed on Wednesday was at 9.4 million barrels per day (bpd) in the week ended July 5, the highest since 2019 for the week that includes the Independence Day holiday. Jet fuel demand on a four-week average basis was at its strongest since January 2020.
The strong fuel demand encouraged US refiners to ramp up activity and draw from crude oil stockpiles. US Gulf Coast refiners' net input of crude rose last week to more than 9.4 million bpd for the first time since January 2019, government data showed.
Signs of weaker demand from China, the world's biggest oil importer, could counter the outlook from the United States and weigh on prices.
"The recent downside correction is evidently over, although the speed of further ascent might be hindered by falling Chinese crude oil imports, which plummeted 11pc in June from the previous year," said Tamas Varga of oil broker PVM.
US active oil rig count, an early indicator of future output, fell by one to 478 this week, the lowest since December 2021, energy services firm Baker Hughes reported on Friday.
Money managers raised their net long US crude futures and options positions in the week to July 9, the US Commodity Futures Trading Commission (CFTC) said on Friday.
