Oil prices were relatively steady on Friday, drawing some support from positive U.S. economic data. However, concerns about sluggish demand conditions in Asia put crude oil on track for a third consecutive week of losses.
Brent oil futures expiring in September were stable at $82.38 per barrel, while West Texas Intermediate (WTI) crude futures edged up slightly to $81.41 per barrel by 21:07 ET (01:07 GMT).
U.S. GDP growth, Fed rate cut hopes
The strong U.S. GDP report and hopes for a potential Federal Reserve interest rate cut provided some positive factors for oil prices. Data released on Thursday showed the U.S. economy grew more than expected in the second quarter, despite challenges from high interest rates and stubborn inflation.
This better-than-anticipated economic growth fueled optimism that the world’s largest oil consumer could achieve a “soft landing,” with steady growth and easing inflation. This, in turn, raised hopes the Fed may start cutting rates as soon as September. Upcoming personal consumption expenditures (PCE) price index data, the Fed’s preferred inflation gauge, will offer more clues on this front before the central bank’s next meeting.
Positive signs from U.S. oil inventories
Steady drawdowns in U.S. oil inventories also provided some positive signals for the oil market, as robust fuel demand persisted during the peak summer travel season.
Read more: Oil prices slip amid concerns over China’s demand, pending U.S. economic data
Concerns over slowing growth and demand
However, Brent crude was still down about 0.3 percent for the week, while WTI was set to lose nearly 2 percent, weighed down by persistent concerns over slowing growth and demand in top oil importer China. Beijing unexpectedly cut several key lending rates this week in an effort to further loosen monetary policy amid growing worries about sluggish economic expansion.
Oil’s downward trend was partly triggered by last week’s Chinese GDP data, which showed the economy grew less than expected in the second quarter. Uncertainty also grew around Japan’s economy following mixed inflation figures from Tokyo, raising doubts about the Bank of Japan’s ability to hike interest rates next week.
The speculation around a possible ceasefire between Israel and Hamas, or the potential for further escalation, prevented traders from factoring in a risk premium when pricing oil.
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