Energy
Thursday, June 13th, 2024 7:13 pm EDT
Key Points
- Economic data showing easing inflation in the U.S. suggests a potential for the Federal Reserve to cut interest rates, which could stimulate the economy and impact crude oil futures.
- Wholesale prices unexpectedly fell in May by 0.2%, contrasting with rising prices in April, as reported by the Labor Department. This followed stable consumer prices in May, indicating economic stability.
- Despite a recent sell-off due to OPEC+ plans to increase production later in the year, oil prices have recovered by 4% this week. Analysts believe the initial sell-off was an overreaction, reflecting ongoing market dynamics and global economic conditions.
Oil futures stabilized on Thursday following U.S. economic data suggesting easing inflation, which could prompt the Federal Reserve to consider interest rate cuts to stimulate the economy. Wholesale prices unexpectedly dropped by 0.2% in May after a previous rise, as reported by the Labor Department. This news came after Wednesday’s announcement that consumer prices remained unchanged. Despite a recent sell-off driven by OPEC+ plans to increase production, oil prices have rebounded by 4% this week, reflecting analysts’ view of an overreaction to market dynamics.
As of today, West Texas Intermediate for July delivery traded at $78.62 per barrel, up 12 cents, marking a year-to-date gain of 9.8%. Brent crude for August delivery was at $82.78 per barrel, up 18 cents, with a year-to-date increase of 7.5%. RBOB Gasoline for July delivery stood at $2.41 per gallon, up 0.77%, reflecting a year-to-date rise of 14.7%. Natural gas for July delivery was priced at $2.98 per thousand cubic feet, down 2.10%, with an 18.4% increase year-to-date.
The Federal Reserve, in its recent decision, left the fed funds rate unchanged and signaled a potential reduction later this year, a downgrade from previous expectations of three cuts. Lower interest rates typically stimulate economic growth and increase crude oil demand, but fewer cuts could limit upside potential for oil prices. Additionally, the U.S. reported a surprise increase in oil inventories by 3.7 million barrels, contrary to expectations of a decrease, while gasoline inventories rose by 2.6 million barrels due to subdued fuel demand.
Analysts like Tamas Varga from PVM foresee rising demand and declining global oil inventories, but they caution that such improvements may occur later than expected, with a potentially volatile path ahead. Looking forward, many analysts anticipate a tightening oil market at least through the third quarter of this year, with Peter Low of Redburn Atlantic predicting deficits of 1.7 million barrels per day (bpd) in Q3 and 1.5 million bpd in Q4, before transitioning to a surplus in 2025.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/06/13/crude-oil-prices-today.html
