ANKARA
Oil prices declined on Friday from their three-month highs as investors factored in economic growth confidence after US consumer inflation fell to its lowest level in more than two years.
International benchmark Brent crude traded at $81.19 per barrel at 10.12 a.m. local time (0712 GMT), a 0.21% loss from the closing price of $81.36 a barrel in the previous trading session on Thursday.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $76.75 per barrel, down 0.18% from the previous session’s close of $76.89 per barrel.
Brent oil hit $83.06 per barrel on Thursday, the highest level since April 25, while WTI hit $77.93 per barrel, the highest level since April 26, due to lower-than-expected US Consumer Price Index data. The index bolstered market sentiment due to increased demand in the world’s largest oil consumer.
Although customs data released on Thursday revealed that China’s crude oil imports jumped 45% year on year in June, markets regarded this data as bearish, as the country’s inventories continue to expand amid concerns about sluggish domestic consumption.
The International Monetary Fund (IMF) said Thursday in its G-20 Surveillance Note report that the global economy “is navigating a challenging period” and “risks are mostly tilted towards the downside.”
Crude oil prices, which are indexed to the US dollar, rose as the value of the greenback fell based on market forecasts of a slowing in the Fed’s interest rate hikes amid favorable inflation data.
Prices were bolstered after the International Energy Agency (IEA) predicted a tighter market, citing Saudi Arabia’s voluntary output cuts, which have been extended into August and potentially beyond, as causing a further drop in crude oil output of 1 million barrels per day (bpd) in July.
The agency expects these cuts will lead to a steep decline in global supply in the short term, especially if other OPEC+ members follow suit.
The research does note, however, that the impact of earlier OPEC+ cuts has been reduced by greater quantities from other producers such as the US and Iran, as well as worldwide biofuels. In the long term, the report suggests that the recovery in global oil demand may lose momentum, and vehicle fleet electrification and efficiency measures may further slow growth.
The agency also projected a more positive global demand outlook on the back of surging petrochemical use, particularly in China, which is expected to account for 70% of global gains.
