InfoQuest – West Texas Intermediate (WTI) crude oil futures in New York closed negative on Friday (June 28) as investors took stock of weak US fuel demand. And sell crude oil contracts for a profit at the end of the quarter. Meanwhile, May inflation data increases the chance that the Fed will start cutting interest rates this year.
The WTI contract is scheduled for delivery in August. The price of oil fell by 20 cents, or 0.24%, to close at $81.54 per barrel.
Brent crude futures for August delivery rose 2 cents, or 0.02%, to settle at $86.41 a barrel.
This week, WTI futures fell 0.2% and Brent futures rose 0.02%, but both contracts gained about 6% in June.
The Energy Information Administration (EIA) released a report on Friday stating that at the same time, oil production and demand in the United States rose to a four-month high in April. But gasoline demand fell to 8.83 million barrels per day, the lowest level since February.
Analysts say some traders took profits from crude oil contracts at the end of the second quarter after oil prices rose in early June.
The U.S. personal consumption expenditures price index, the Federal Reserve’s main gauge of inflation, was flat in May, boosting hopes that the Fed will cut interest rates in September.
CME’s FedWatch tool indicates that traders currently see a 64% chance of the Fed making its first rate cut in September, up from 50% last month.
The US Department of Commerce revealed that the headline personal consumption expenditures price index, which includes food and energy categories, rose 2.6% in May year-on-year. This is in line with analyst expectations of 2.7% in April, and when compared month-on-month, the overall PCE index was unchanged in May. Or it rose by 0.0%, in line with analyst expectations. After a 0.3% increase in April.
Core PCE, which excludes food and energy, a measure of inflation that the Federal Reserve gives importance to, rose 2.6% in May on a year-over-year basis, in line with analysts’ expectations, from 2.8% in April. On a monthly basis, core PCE rose 0.1% in May, in line with analysts’ expectations, from 0.3% in April.
The Personal Consumption Expenditures Index (PCE) is a measure of inflation that captures changes in consumer behavior. It covers prices of goods and services on a broader scale than the Consumer Price Index (CPI).
Oil prices may not change much in the second half of 2024, amid concerns about Chinese demand and the potential for higher oil supplies from major producers, a Reuters poll published on Friday suggested. This will mask geopolitical risks.
It is expected that the survey results will average US crude oil futures at $79.72 per barrel this year. The average price of the Brent crude contract will be $83.93 per barrel.
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