Oil up over positive economic data in US

Oil prices increased on Friday over demand hopes as bullish US economic data suggested an earlier interest rate cut in the world’s largest oil-consuming country and over expectations that OPEC+ countries could further extend supply cuts.

International benchmark Brent crude traded at $82.28 per barrel at 10.16 a.m. local time (0716 GMT) for a 0.45% rise from the closing price of $81.91 a barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $78.44 per barrel at the same time, for a 0.23% gain after the previous session closed at $78.26 per barrel.

Oil prices spiked up during early Asian trade following data indicating a slowdown in the Personal Consumption Expenditures (PCE) price index in the US, which is used as an inflation tracker by the Federal Reserve (Fed).

Analysts stated that the inflation indicator, which remains sluggish but falls in line with expectations, raises the prospects of the Fed cutting interest rates in the first half of the year.

An earlier-than-expected interest rate cut in the US, the world’s largest oil consumer, fueled hopes of better oil demand, increasing oil prices.

Meanwhile, the prospects of the Organization of Petroleum Exporting Countries (OPEC) extending production cuts in the second quarter of this year also supported further price rises.

The OPEC+ group announced that it would cut production by 2 million barrels per day (bpd) in November 2022 and subsequently decided to make an additional cut of approximately 1.6 million bpd in May. The group has also made voluntary cuts in varying amounts since July 2023.

In early February, the group confirmed that it would continue its policy of reducing oil production until April 3.

However, concerns over weak economic data from China, the world’s second-largest oil consumer, which is negatively affecting oil demand, have limited upward price movements.

The Purchasing Managers’ Index of the manufacturing industry, announced by China’s National Bureau of Statistics, fell to 49.1 in February, down 0.1 points from January.

• International benchmark Brent
• West Texas Intermediate