U.S. crude oil prices held steady on Friday amid a backdrop of declining inventories and stable consumer prices, sparking optimism about potential increases in demand. The week saw West Texas Intermediate (WTI) prices remaining relatively flat, marking a marginal decline of 0.48% following four consecutive weeks of gains.
Despite this pause, U.S. crude oil prices showed resilience towards the end of the week, climbing for a third consecutive day. This uptick was supported by June’s subdued consumer inflation figures, which reached their lowest point in over three years. These numbers bolstered expectations that the Federal Reserve might cut interest rates, potentially stimulating economic activity and oil demand.
As of the latest updates, West Texas Intermediate for the August contract was priced at $82.82 per barrel, up 20 cents or 0.24%. Year-to-date, U.S. oil has seen a robust gain of 15.5%. Meanwhile, the Brent September contract stood at $82.80 per barrel, a slight increase of 6 cents or 0.07%, with a year-to-date advance of 10.93%.
U.S. Crude Oil Prices Hold Steady Amid Inventory Declines and Economic Indicators
Gasoline prices also saw upward movement, with the August contract for RBOB Gasoline reaching $2.52 per gallon, reflecting a 0.27% rise and a year-to-date increase of 20.1%. Conversely, natural gas prices for the August contract rose to $2.32 per thousand cubic feet, up 5 cents or 2.43%, despite a year-to-date decline of 7.6%.
Analysts like John Evans from PVM noted that while market performance may have been lukewarm recently, there are signs of renewed momentum within the energy complex. This sentiment was echoed by reports of decreasing U.S. crude oil and gasoline inventories for the week ending July 5, suggesting a potential uptick in summer fuel demand.
JPMorgan forecasts a positive outlook for Brent prices, anticipating averages of $84 and $83 per barrel for the third quarter and full year, respectively, before a decline in the fourth quarter.
However, conflicting signals regarding global oil demand persisted, with OPEC projecting a robust increase of 2.2 million barrels per day (bpd) driven by solid economic growth, while the International Energy Agency (IEA) offered a more conservative estimate of just under 1 million bpd amid softer global economic conditions, particularly in China.
Natasha Kaneva of JPMorgan highlighted mixed economic signals from China as a potential factor affecting global oil demand growth, with the bank forecasting a worldwide demand gain of 1.4 million bpd for the year.
In addition to market dynamics, attention was drawn to potential weather impacts on oil infrastructure, with forecasts from Colorado State University predicting an “extremely” active storm season. Despite minimal damage from Hurricane Beryl to Gulf Coast oil infrastructure, the outlook for the remainder of the hurricane season remains a significant factor to monitor in oil market assessments moving forward.
