KEY POINTS ~ Following a sell-off brought on by OPEC+’s agreement to increase output later this year, the oil market is recovering.
~ The last two sessions could be a sign that the oil market is bottoming out, according to TD Securities senior commodity strategist Ryan McKay.
~ The Fed is expected to lower rates later this year, as predicted by traders, which would increase the demand for oil. The ECB dropped rates.
Thursday saw a 2% increase in crude oil futures for a second day in a row as traders gambled that the Federal Reserve will lower interest rates in September, following the European Central Bank’s five-year trend of rate cuts. Following a losing run this week due to OPEC+’s agreement to boost production later this year, oil prices finished more than 1% higher on Wednesday. The stronger-than-expected private payroll data on Wednesday raised expectations that the Fed will lower interest rates. There is currently a 70% probability, according to Fed futures trading, that the central bank will lower rates in September. The prospect of higher economic growth and increased demand for oil is enhanced by lower interest rates.Tamas Varga, an analyst at oil dealer PVM, tweeted on Thursday that “the May private payroll data yesterday also suggested a slowing labour market, much to the delight of the Federal Reserve.” “US equity markets reached all-time highs, and oil followed suit with unwavering enticement.”
The energy costs as of Thursday are as follows:
July contract price for West Texas Intermediate is $75.55 per barrel, up 2% or $1.48. US oil has increased by 5.44% so far this year.
Brent August contract: up $1.46, or 1.86%, to $79.87 a barrel. The worldwide benchmark has increased by 3.67% thus far this year.
RBOB Gasoline July contract: a 1.87% increase to $2.39 a gallon. Petrol futures have gained 14% so far this year.
Natural gas contract for July: $2.82 per thousand cubic feet, an increase of 2.32%. As of now, natural gas has increased by 12.2%.
