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Oil Prices Inch Up Amid Inflation Data and Downbeat Week

Oil Prices Inch Up Amid Inflation Data and Downbeat Week

27 May 2024

Oil prices inch up ahead of inflation data following a downbeat week.

Oil prices saw slight gains in subdued trading due to public holidays in Britain and the United States. This followed a downbeat week shaped by concerns over U.S. interest rates amid persistent inflation.

By 1233 GMT, the Brent crude July contract had increased by 56 cents to $82.68 per barrel, while the more actively traded August contract rose by 59 cents to $82.43. U.S. West Texas Intermediate (WTI) crude futures also saw a rise, up 58 cents to $78.30.

Brent fell approximately 2% last week, and WTI declined nearly 3% following Federal Reserve minutes indicating that some officials are open to further interest rate hikes if necessary to control persistently high inflation.

“Sentiment in the oil market has been volatile as investors continuously adjust their expectations regarding the Federal Reserve’s monetary policy path.

Recent data from Western economies has altered rate cut expectations, varying by region.

Bank of America analysts stated Friday that the European Central Bank is likely to implement a rate cut in June, while investors are preparing for prolonged higher rates in the U.S.

The U.S. Personal Consumption Expenditures (PCE) index, anticipated this week, will be closely watched for additional indications about interest rate policy. Scheduled for release on May 31, this index is considered the Federal Reserve’s preferred measure of inflation.

German inflation data on Wednesday and Eurozone readings on Friday will also be monitored for indications of a potential European rate cut that traders have anticipated for next week.

Attention will also be focused on the upcoming OPEC+ meeting, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia. The meeting is scheduled to take place online on June 2.

According to sources within OPEC+, an extension of the current output cuts totaling 2.2 million barrels per day is expected this month.