Brent oil hovers over $80 as inflation worries ease

Brent oil hovers over $80 as inflation worries ease

Brent, the global oil benchmark, remained above $80 on Wednesday due to China’s commitment to stimulate economic growth and the anticipation that the U.S. Federal Reserve will soon halt interest rate hikes. At 1226 GMT, Brent futures rose by 64 cents to $80.27 per barrel, while U.S. West Texas Intermediate (WTI) crude increased by 44 cents to $76.19 per barrel.

China’s top economic planner announced on Tuesday its intention to implement policies that would revive and expand consumption in the second-largest economy globally, potentially boosting oil demand. In the U.S., a report revealed that retail sales in June grew less than expected, leading to expectations that the Federal Reserve will cease raising rates after a projected 25 basis-point increase at its upcoming meeting on July 25-26. Higher interest rates can hinder economic growth and reduce oil demand.

Another positive development came from Klaas Knot, a member of the European Central Bank (ECB) governing council, who suggested that rate hikes beyond the next meeting were not certain. Additionally, recent inflation data from Canada and the United Kingdom, indicating a cooling trend, have also contributed to a more positive sentiment. Naeem Aslam, the chief investment officer at Zaye Capital Markets, stated that traders have become more optimistic as inflation eases off, and any improvement in inflation data implies an improvement in oil demand.

On the supply side, the American Petroleum Institute (API) reported a decline in crude oil, gasoline, and distillate inventories last week. However, PVM analyst John Evans noted that the market’s calm opening was primarily due to the API report, which showed a smaller crude draw of 800,000 barrels instead of the expected 2.3 million barrels. This outcome disappointed those who were anticipating more significant market movements.

Meanwhile, Russia plans to reduce its oil exports by 2.1 million metric tons in the third quarter, aligning with its voluntary export cuts of 500,000 barrels per day in August, as stated by the energy ministry.

In conclusion, the oil market remains influenced by China’s commitment to economic growth, expectations of a halt in interest rate hikes by the U.S. Federal Reserve, and various factors affecting supply.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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