By Adedapo Adesanya
Crude oil depreciated on Friday as investors weighed weaker US consumer sentiment against mounting hopes for a rate cut in the world’s largest oil producer in September, with Brent losing 37 cents to sell for $85.03 per barrel and the US West Texas Intermediate (WTI) declining by 41 cents to close at $82.21 a barrel.
For the week, Brent futures fell more than 1.7 per cent after four weeks of gains, while the WTI futures posted a 1.1 per cent weekly loss.
According to a University of Michigan study, consumer mood in the US plummeted to an eight-month low in July despite rising inflation projections for the next year and beyond.
The US Labour Department also said that the producer pricing index (PPI) grew 0.2 per cent in June, somewhat more than predicted, as the cost of services increased.
Nonetheless, investors anticipate the US Federal Reserve to begin reducing interest rates in September as lower rates are expected to boost economic growth, which could boost fuel consumption.
Analysts noted that cooling US inflation numbers may support the case for the US central bank to kick-start its policy easing process earlier rather than later.
Oil prices have drawn some support from US gasoline demand, which government data showed on Wednesday was at 9.4 million barrels per day in the week ended July 5, the highest since 2019 for the week that includes the Independence Day holiday.
Also, jet fuel demand on a four-week average basis was strongest since January 2020.
The strong fuel demand encouraged U.S. refiners to ramp up activity and draw from crude oil stockpiles.
Meanwhile, signs of reduced demand from China, the world’s largest oil importer, might undermine the US forecast and weigh on prices.
Baker Hughes announced on Friday that the active oil rig count in the US decreased by one to 478 this week, the lowest since December 2021.
Prices have maintained in a limited $75 to $90 per barrel trading range since the end of 2022, as the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ group continue to keep supplies off the market, but recurring worries about global oil demand have tempered positive optimism.