Oil Rises for Third Day on Improving Demand and Weaker Dollar - Yahoo Finance
Oil Rises for Third Day on Improving Demand and Weaker Dollar
(Bloomberg) -- Oil climbed for a third day on signs of stronger demand, and signals the Federal Reserve is getting close to its much-anticipated pivot.
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Brent crude rose toward $86 a barrel and West Texas Intermediate neared $83. Data this week showed improved consumption of gasoline and jet fuel in the US over the summer travel season, while nationwide crude stockpiles posted another decline. Prompt spreads pointed to a tightening of near-term conditions, especially for WTI, the benchmark contract for US oil.
US inflation cooled broadly in June to the slowest pace since 2021, boosting bets that the Federal Reserve will start to reduce borrowing costs this quarter. That weighed on the US dollar — with a gauge of the currency set for the first back-to-back weekly drop since early May — making commodities more attractive for overseas buyers.
The unexpected, sequential drop in headline inflation “was a gift for pivot-bettors,” aiding risk assets, said Vishnu Varathan, head of economics and strategy for Mizuho Bank Ltd. in Singapore.
Oil has pushed higher this year as OPEC+ reined in production to tighten the market, offsetting supply increases from nations outside the cartel. The group predicts that worldwide crude consumption will expand by more than 2 million barrels a day this year, although the International Energy Agency has a more cautious view as China’s economy cools.
While recent moves in headline prices have been lackluster, curbing volatility, metrics indicate underlying strength. Brent’s prompt spread — the difference between the two nearest contracts — topped $1 a barrel in backwardation this week, more than twice the difference a month ago. For WTI, it has gapped out to $1.39 a barrel.
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Related Knowledge Center: ENERGY BASICS: petroleum
While electric-powered vehicles may be the ride of the future, oil remains at least for now the dominant fuel for transportation around the world. And after a period of time at the end of the 20th century when oil was subject to wide fluctuations in price, new supplies in North America as a result of non-conventional recovery techniques have helped stabilize prices.