In Asian trade, oil prices increased, continuing a recent upward trend as speculation about tighter supply and stronger demand in the largest fuel consumer in the world increased in response to a larger-than-expected drop in U.S. stockpiles.
The previous week has seen sharp losses in the crude markets as worries about slowing global demand were stoked by a series of dismal economic data from China, the world’s largest importer.
September-expiring Brent and West Texas Intermediate oil futures saw 0.4% and 0.5% increases, respectively, to $85.41 and $81.88 a barrel. Additionally supporting oil was the growing likelihood of a Federal Reserve interest rate drop, which has been pounding the dollar in recent sessions.
Trader wagers that the Fed will start lowering rates as early as September increased in response to dovish remarks made by Fed members and soft inflation data. The oil demand is increased by lower rates since they indicate a better future for economic growth. Also, by making crude less expensive for overseas markets, they depress the dollar, which boosts oil demand.
