By Nicole Jao
NEW YORK (Reuters) -Oil prices edged up on Friday on signs of easing inflationary pressure in the United States, the world’s biggest oil consumer, but weaker consumer sentiment and demand worries limited the gains.
Brent crude futures were up 5 cents to $85.45 a barrel at 12:28 p.m. EDT (1628 GMT). U.S. West Texas Intermediate crude futures rose 12 cents, or 0.15%, at $82.74 a barrel. Both contracts were up in the prior two sessions.
Brent futures were set to fall about 1% week-on-week following four weeks of gains and WTI futures were on track for a 0.5% weekly decline.
The U.S. Labor Department said the producer price index (PPI) rose 0.2% in June, slightly more than expected, amid a climb in the cost of services. However, that did not change expectations that the Federal Reserve could start cutting interest rates in September.
Prices increased slightly after a survey showed inflation expectations over the next year and beyond improved even though U.S. consumer sentiment ebbed in July.
“Overall, data show that inflation is a bit lower,” said Phil Flynn, an analyst at Price Futures Group. “The market isn’t afraid of the Fed at this point.”
Lower rates are expected to boost economic growth, which would help raise fuel consumption.
The market, however, is still awaiting clearer signs of action. While Fed Chair Jerome Powell acknowledged the recent improving trend in price pressures, he told lawmakers that more data was needed to strengthen the case for rate cuts.
“Cooling U.S. inflation numbers may support the case for the Fed to kick-start its policy easing process earlier rather than later, but it also adds to the series of downside surprises in U.S. economic data, which points to a clear weakening of the U.S. economy,” said Yeap Jun Rong, market strategist at IG.
Indications of strong summer fuel demand in the U.S. also supported prices.
U.S. gasoline demand 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, government data showed on Wednesday. Jet fuel demand on a four-week average basis was at its strongest since January 2020.
The strong fuel demand encouraged U.S. refiners to ramp up activity and draw from crude oil stockpiles. U.S. 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.
Elsewhere, weaker demand signs from China, the world’s biggest oil importer, could counter the outlook from the U.S. 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 11% in June from the previous year,” said Tamas Varga of oil broker PVM.
(Reporting by Nicole Jao and Shariq Khan in New York, Paul Carsten in London, Arunima Kumar in Bengaluru and Jeslyn Lerh in Singapore; Editing by Sherry Jacob-Phillips, Susan Fenton and David Evans)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.