Oil prices slumped in Asian trade on Friday, but are on track for the fifth week of gains in a row after strong economic data in the US, China’s stimulus measures, and speculation about OPEC+ production cuts.
Brent crude was down 29 cents, or 0.3%, to $83.95 a barrel as of 0600 GMT, but was on track for a 3.6% weekly gain. West Texas Intermediate (WTI) crude fell 27 cents, or 0.3%, to $79.82 a barrel, but was heading for a 3.6% weekly gain.
Oil rose in the previous session as strong earnings reports and data showing the US economy growing faster than expected in the second quarter eased fears of a global slowdown.
U.S. second-quarter gross domestic product grew at 2.4%, beating the 1.8% consensus, the Commerce Department said Thursday, supporting Federal Reserve Chairman Jerome Powell’s view that the economy can achieve a soft landing.
Expectations for more stimulus measures, especially in China’s struggling real estate sector, also provided some support to prices.
The latest US Q2 GDP figures and other economic data provide further confirmation criteria for soft landing hopes and a much brighter demand outlook for oil.
Markets are also looking forward to the next market watch committee meeting of the Organization of Petroleum Exporting Countries and its allies on August 4 regarding the continuation of voluntary production cuts.
In the third quarter of 2023, we continue to see upward movements in oil prices. If Brent oil sustains above $90 per barrel, it is likely to see an easing in OPEC+ and Saudi Arabian voluntary crude supply cuts.
However, recent interest rate hikes by global central banks, which stubbornly want to curb ongoing inflation, still keep questions about long-term demand.
On Wednesday, the US Federal Reserve raised interest rates by another 25 basis points, as was widely expected, and the European Central Bank did the same on Thursday.
Oil prices amid monetary policy moves appear to be under some pressure in the wider risk environment.
Oil slumped earlier this week after data showed US crude inventories fell less than expected. Unfortunately, we still don’t see enough data on increased product demand, especially in distillates, which provided most of the positive aspects of last month.
