Oil prices saw marginal gains on Friday, supported by expectations that the US Federal Reserve (Fed) will start reducing interest rates this year amid rate-cut decisions from other central banks.
International benchmark Brent crude traded at $79.97 per barrel at 10.23 a.m. local time (0723 GMT), an increase of 0.13% from the closing price of $79.87 per barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at $75.61 per barrel at the same time, a 0.08% rise from the previous session that closed at $75.55 per barrel.
Oil prices climbed on stronger expectations that the Fed will start reducing interest rates this year. Analysts anticipate that low interest rates will stimulate economic activity and increase oil demand in support of higher oil prices.
US labor market data released on Wednesday indicates an economic slowdown and raises the possibility that the Fed will slash interest rates.
The probability of the Fed’s first interest rate cut is rated at 81% for September and 83% for November, while the bank’s second interest rate cut is rated at 90% for December.
Market players are currently awaiting statements from Fed officials and the publication of the US employment report due later in the day for clues into the bank’s future plans.
While major central banks worldwide are slowly starting to step back from the hawkish policies they follow to fight inflation, the European Central Bank (ECB) cut interest rates for the first time in five years on Thursday, following a similar move from Canada.
Meanwhile, signs of oversupply in the market capped further price gains.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed to gradually phase out cuts of 2.2 million bpd on a monthly basis until the end of September 2025.
The announcement raised concerns that the market supply-demand balance would be disrupted amid an expected increase in global demand.
