By Yuka Obayashi
If you're looking to make smart investment decisions, understanding the latest trends in oil prices is crucial. Oil prices rose on Thursday, bouncing back from previous losses, fueled by hopes of potential U.S. interest rate cuts that could boost economic activity and fuel demand. However, concerns about slower global demand continue to weigh on the market.
Crude oil futures inched up by 0.2% to $79.93 a barrel, while U.S. West Texas Intermediate crude rose by 0.3% to $77.21 per barrel. These gains come after both benchmarks fell more than 1% on Wednesday due to unexpected increases in inventories and easing tensions in the Middle East.
The recent rise in U.S. consumer prices and a slowdown in annual inflation have reinforced expectations that the Federal Reserve will cut interest rates next month. This has led investors to bet on a potential rate cut, which could impact oil prices in the near future.
However, concerns about sluggish global demand, particularly in China, continue to linger. Analysts predict that WTI prices could drop towards the $72 mark in early August. Additionally, U.S. crude oil stockpiles rose unexpectedly last week, adding further pressure on prices.
The International Energy Agency has also trimmed its 2025 estimate for oil demand growth, citing a weakened Chinese economy. This, coupled with softening jet fuel demand due to a slowdown in consumer spending, could further impact oil prices in the coming months.
Despite these demand concerns, geopolitical tensions in the Middle East, particularly Iran's potential response to recent events, continue to support oil prices. The killing of the Hamas leader has raised fears of retaliation, adding a layer of uncertainty to the market.
Overall, while short-term factors like interest rate cuts and inventory levels may influence oil prices, long-term trends in global demand and geopolitical tensions will play a significant role in shaping the future of the oil market. As an investor, staying informed about these factors is crucial for making well-informed decisions and protecting your financial assets.