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Thursday June 13, 2024

Oil rebounds, edges higher ahead of inflation data

By Reuters
May 28, 2024
Representational image of a working oil pumpjack. — AFP/File
Representational image of a working oil pumpjack. — AFP/File

LONDON: Oil prices perked up in muted trade owing to public holidays in Britain and United States after a downbeat week characterised by the outlook for US interest rates in the face of sticky inflation.

The Brent crude July contract was up 76 cents at $82.88 a barrel by 1411 GMT. The more active August contract rose 80 cents to $82.64. US West Texas Intermediate (WTI) crude futures were up 78 cents at $78.50.

Brent lost about 2.0 per cent last week and WTI nearly 3.0 per cent after Federal Reserve minutes showed some officials would be willing to raise interest rates further if it were deemed necessary to control stubbornly high inflation.

“Sentiment in the oil complex...has been skittish as investors are constantly recalibrating expectations for the Federal Reserve’s monetary policy trajectory,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Recent data emanating from Western economies has shifted rate cut expectations depending on geography.The European Central Bank (ECB) is likely to make a cut in June while investors are braced for higher-for-longer US rates, Bank of America analysts said on Friday.

The US personal consumption expenditures (PCE) index expected this week will be in the spotlight for further signals about interest rate policy. The index, due to be released on May 31, is viewed as the US Federal Reserve’s preferred measure of inflation.German inflation data on Wednesday and euro zone readings on Friday will also be watched for signs of a European rate cut that traders have pencilled in for next week.