U.S. inflation data suggested the interest rate hike cycle in the world's biggest economy is set to finally cool.


London: Oil benchmark Brent futures breached $80 a barrel for the first time since May on Wednesday after U.S. inflation data suggested the interest rate hike cycle in the world's biggest economy is set to finally cool.
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, but that the U.S. rate-hiking cycle has likely peaked. Higher rates can slow economic growth and reduce oil demand.
"This is the lowest number since the pandemic ... but it is important to keep in mind that this is still a transitory situation. But overall, traders are cheering this event," said Naeem Aslam, chief investment officer at Zaye Capital Markets, describing the inflation figures.
Brent futures were 51 cents up at $79.91 a barrel by 1256 GMT, having risen as high as $80.05 earlier. U.S. West Texas Intermediate (WTI) crude was up 62 cents at $75.45 a barrel.
A weaker dollar, optimism surrounding Chinese stimulus and U.S. stockpile data were also supporting the positive sentiment, said Fiona Cincotta, senior financial markets analyst at City Index.
Meanwhile, forecasts from the U.S. Energy Information Administration (EIA) and the International Energy Agency (IEA) point to the market tightening into 2024.
The IEA expects the oil market to stay tight in the second half of 2023, citing strong demand from China and developing countries combined with supply cuts from leading producers. New forecasts from the IEA are expected this week.
"The oil balance gets tighter either when supply is downgraded, or demand is revised up. If both happens at the same time the change can be seismic," said PVM analyst Tamas Varga referring to the EIA's outlook.
"Clearly, it is not worried about inflation-induced recession that could potentially dent global oil consumption."
Top producer Saudi Arabia pledged last week to extend a production cut of 1 million bpd in August, while Russia will cut exports by 500,000 bpd.
Courtesy: Reuters

Microsoft races past $4 trillion valuation after solid results
- 9 hours ago
Saudi amusement park accident leaves 23 wounded: reports
- 7 hours ago

Pakistan launches new Remote Sensing Satellite
- 11 hours ago
Rs9.7m looted from cash van in Karachi
- 11 hours ago
CJCSC Mirza meets Egyptian President, top military brass
- 7 hours ago

Govt cuts petrol price by Rs7.54, increases high-speed diesel by Rs1.48
- 4 hours ago
Pakistan, US successfully conclude landmark trade deal
- 10 hours ago

OGRA announces significant reduction in LPG prices
- 10 hours ago

The real reason we tip
- 13 hours ago

Trump’s new EU trade deal, briefly explained
- 13 hours ago

The Trump administration attack dog you should pay attention to
- 13 hours ago

Gold prices drop in Pakistan, global markets
- 11 hours ago