July 12, 2023 (MLN): Oil prices cooled down on Wednesday as market participants await US Consumer Price Index (CPI) data indicating the economic outlook in the world's biggest economy.
Brent crude is currently trading at $79.23 per barrel, up by 0.14% on the day.
While West Texas Intermediate crude (WTI) is trading at $74.76 per barrel, up by 0.20% on the day.
Oil prices experienced a significant surge of 2% in yesterday’s trading session as the market assessed the outlook for demand after China’s measures to support its struggling property market.
"Fundamentally, we should reach a supply deficit situation in the third quarter, but whether that is trumped by recession concerns and cautious sentiment around rate hikes remains to be seen," DBS Bank's lead energy analyst Suvro Sarkar said, Reuters reported.
CME FedWatch Tool is currently showing a 92.4% probability of an interest rate hike in the upcoming FED meeting.
Markets expect one more rise, but the U.S. rate-hiking cycle is peaking.
Higher rates can slow economic growth and reduce oil demand.
The International Energy Agency (IEA) expects the oil market to stay tight in the second half of 2023, citing strong demand from China and developing countries and supply cuts from leading producers.
China’s sluggish economic recovery, monetary tightening by central banks, and resilient crude flows from producers including Russia and Iran have provided headwinds for oil this year.
