Oil prices have risen for the third consecutive day amid signs of improving demand and the Federal Reserve nearing a long-awaited decision to cut interest rates. Brent crude rose to $86 per barrel, while West Texas Intermediate surpassed $83. Last week's data showed an improvement in gasoline and jet fuel consumption in the United States during the summer travel season. Additionally, national crude oil inventories recorded another decline. The spot premium for Brent crude increased, indicating tighter market conditions with rising demand and diminishing supply. Inflation in the United States broadly slowed to its lowest rate since 2021 in June, reinforcing bets that the Federal Reserve will begin to lower borrowing costs in the current quarter. This affected the U.S. dollar, with the greenback index recording its first consecutive weekly decline since early May, making commodities more attractive to foreign buyers.
Oil prices have increased this year after the "OPEC+" alliance restricted production to absorb some supplies from the market, offsetting increases in supply from non-member countries. The alliance expects global crude oil consumption to grow by more than two million barrels per day this year, although the International Energy Agency has more cautious forecasts due to the slowing Chinese economy. Recent movements in key prices have been weak, with the volatility index dropping to its lowest level in six years. However, widely monitored indicators suggest strong market conditions. The price difference between various Brent futures contracts exceeded one dollar per barrel in backwardation, more than double the spread from a month ago.
