Investing.com-- In Asian trade on Friday, oil prices saw an increase fueled by optimism surrounding U.S. interest rate cuts and improved summer demand. However, despite this positive movement, some profit-taking led to weekly losses.
Speculation about a potential ceasefire between Israel and Hamas also contributed to a decrease in the risk premium attached to oil this week, although an agreement seemed unlikely in the near future. Additionally, Hurricane Beryl caused limited disruptions in production along the Gulf of Mexico, resulting in some losses for oil.
Brent crude futures expiring in September rose by 0.1% to $85.52 a barrel, while WTI futures rose by 0.1% to $81.49 a barrel.
Dollar Weakens as Rate Cut Hopes Soar Due to Weak CPI Data
Crude prices benefited from a significant drop in the dollar following softer-than-expected U.S. inflation data, which increased expectations of a rate cut in September. The dollar fell to a one-month low against a basket of currencies on Thursday.
The CPI data for June was slightly weaker than expected, raising hopes that the Federal Reserve will cut rates by 25 basis points in September. This sentiment was supported by positive comments from Fed officials regarding disinflation and a cooling U.S. economy.
Analysis:
Oil prices experienced a boost in Asian trade due to optimism surrounding U.S. interest rate cuts and improved summer demand. However, profit-taking led to some weekly losses. Speculation about a ceasefire between Israel and Hamas also influenced market dynamics. The weakening dollar and hopes for a rate cut further supported crude prices. Overall, the oil market remains volatile, with factors like geopolitical tensions and economic data playing a significant role in price movements. Investors should monitor these factors closely to make informed decisions about their investments.