Oil prices fell slightly on Friday as investors weighed weak U.S. consumer confidence against rising hopes for a Fed interest rate cut in September.
Brent crude futures fell 37 cents to $85.03 a barrel. WTI crude oil futures closed down 41 cents, or 0.5%, at $82.21 a barrel.
On a weekly basis, Brent futures fell more than 1.7 percent after four weeks of gains. WTI futures fell 1.1% for the week.
The monthly survey conducted by the University of Michigan stated that consumer confidence in the United States fell to an eight-month low in July, but inflation expectations improved next year and beyond.
As service costs increased, the producer price index (PPI) increased by 0.2% in June, slightly more than expected. Investors think the Fed may start cutting interest rates in September. The market is not worried about the Fed at this point.
Lower interest rates are expected to boost economic growth, which in turn will increase fuel consumption.
Cooling US inflation figures may support the idea of ​​the Fed starting the policy easing process earlier. This also adds to a series of downward surprises in US economic data, indicating a clear weakening of the US economy.
Oil prices received some support from U.S. gasoline demand, which stood at 9.4 million barrels per day (bpd) in the week ending July 5, according to government data released Wednesday; this was the highest level since 2019 in the week that included the Independence Day holiday. On a four-week average basis, jet fuel demand reached its strongest level since January 2020.
Strong fuel demand has encouraged U.S. refineries to increase operations and draw on crude oil inventories. Net crude input from U.S. Gulf Coast refineries rose above 9.4 million barrels per day last week for the first time since January 2019, according to government data.
Meanwhile, signs that demand from China, the world’s largest oil importer, will weaken may run counter to the US outlook and put pressure on prices.
The recent downward correction is clearly over, but the pace of any further rise may not be promising given falling imports of Chinese crude oil, which fell 11% in June from a year earlier.
The number of active U.S. oil rigs fell by one this week to 478, the lowest level since December 2021, according to Baker Hughes.
Money managers increased their net long U.S. crude futures and options positions to July 9, the U.S. Commodity Futures Trading Commission (CFTC) said Friday.
