Crude oil prices were poised for a weekly gain earlier today as renewed optimism boosted the market, following positive U.S. economic reports.
The July retail sales report showed a 1% increase, surpassing expectations of a 0.3% rise, according to Reuters. This was a notable rebound from June’s 0.2% decline. Additionally, weekly jobless claims for the week ending August 9 fell by 7,000, coming in below expectations.
“U.S. economic data released this week has eased concerns about a severe economic slowdown,” FGE told Reuters.
This positive data also raises hopes that the Federal Reserve might soon lower interest rates, potentially boosting oil demand. However, the Fed has indicated it is cautious about making any immediate rate cuts, leaving these hopes uncertain.
Despite the oil market‘s strength, there are still several bearish factors affecting prices. Weak Chinese oil demand and recent global demand revisions by OPEC and the International Energy Agency weigh on the market. Additionally, tensions in the Middle East remain high, with ongoing conflict between Israel and Gaza and Iran’s cautious stance. Although Israel is negotiating a possible ceasefire with international mediators, the outcome remains uncertain as Hamas is not participating in the talks.
“Geopolitical risks and the potential for escalating conflict in the Middle East are supporting oil prices as threats of retaliation grow,” said Tim Snyder, chief economist at Matador Economics, to Reuters.