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Data released on Wednesday showed U.S. consumer prices rose
modestly in June and registered their smallest annual increase
in more than two years as inflation continued to subside.
Markets expect one more interest rate rise before the U.S.
rate-hiking cycle has likely peaked. Higher rates can slow
economic growth and reduce oil demand.
Oil prices have rallied by around 12% in two weeks, primarily in
response to supply cuts from top producers Saudi Arabia and
Russia, Craig Erlam, senior market analyst at OANDA, said.
"Some profit-taking at these levels wouldn't be hugely
surprising and may have come sooner if not for the US consumer
price inflation data," he said.
Brent crude futures were up 25 cents to $80.36 per barrel by
0923 GMT, while U.S. West Texas Intermediate crude futures were
up 17 cents at $75.92.
The futures contract structure of the global benchmark Brent
indicates the market is tightening and that OPEC could be
succeeding in its mission to support the market.
The premium of a front month Brent contract to a six-month
February 2024 contract rose to $2.64 a barrel on Wednesday. At
the end of the June, the front month contract was at a discount
to the six month contract.
In the latest insights on the supply-demand balance, a report by
the International Energy Agency (IEA) on Thursday predicted oil
demand would hit a record high this year, but that broader
economic headwinds and interest rate hikes meant the increase
would be slightly less than previously anticipated.
In China, momentum in the post-pandemic recovery slowed with
exports contracting last month at their fastest pace since the
onset of the pandemic three years ago, the country's Customs
Bureau showed on Thursday.
(Reporting by Natalie Grover in London; Additional reporting by
Jeslyn Lerh in Singapore and Laura Sanicola in Washington;
Editing by Jacqueline Wong, Elaine Hardcastle and Barbara Lewis)
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