As investor confidence was encouraged by evidence of strong summer demand and easing inflationary pressures in the world’s largest oil market, the United States, oil prices surged during early Asian trading hours on Friday. Up 37 cents, or 0.4%, to $85.77 per barrel, were Brent crude futures. With a 0.6% increase, U.S. West Texas Intermediate crude futures now trade at $83.12 a barrel.
Though Brent futures were expected to drop by roughly 1% week over week following four weeks of increases, both contracts had gained during the previous two sessions. The weekly movement of WTI futures was essentially flat. Because of the strong demand for fuel, American refiners increased output and took from crude oil reserves, which helped to keep prices stable. For the first time since January 2019, the net input of oil by U.S. Gulf Coast refiners increased to over 9.4 million barrels per day last week, according to official data.
An indicator of short-term supply constraints is the WTI front-month futures’ steepest premium to the next-month contract since April. There is growing optimism that the Federal Reserve will soon lower interest rates after U.S. government statistics released on Thursday revealed an unexpected drop in consumer prices in June.
According to an ANZ analyst, the possibility of relaxing monetary policy has improved confidence in the commodities market. Plus, he said, investor appetite has been bolstered by a declining US dollar. For the third straight day, the U.S. dollar index fell on Friday as traders increased their bets on a U.S. interest rate drop in September.
