Oil futures: Crude consolidates gains as CPI data boosts US rate cut hopes
Quantum Commodity Intelligence – Crude oil futures in Thursday were edging up after consolidating the previous-session's gains, as the latest US inflation report boosted sentiment on the timing for a first US rate cut of 2024.
Front-month Jul24 ICE Brent futures were trading at $83.11/b (1645 GMT), compared to Wednesday's settle of $82.75/b, having tested multi-week lows of just above $81/b in the previous session.
At the same time Jun24 NYMEX WTI was trading at $79.10/b versus Wednesday's settle of $78.63/b.
April's CPI figures revealed an increase of 0.3%, slightly less than expected, while on an annual basis, inflation increased 3.4%, raising prospects for a rate cut in the third quarter, even though inflation remains stubbornly above the Fed's 2% target.
"The first CPI report of Q2 should be seen as welcome news by the FOMC. The headline CPI rose 0.3% in April, while the core CPI also increased 0.3%, in line with expectations but a downshift from the pace registered in Q1," said Wells Fargo in its latest report.
"On balance, the April inflation data should help restore some confidence at the Fed that price growth is continuing to moderate through the month-to-month noise. That said, we think it will take more than just one solid CPI report to induce the first rate cut," added the US bank.
Inventories
Prices were also given a lift after data from the Energy Information Administration (EIA) Wednesday revealed commercial crude stocks fell 2.5 million barrels last week, as refinery throughputs hit the highest rates since the start of the year.
US gasoline stocks also fell for the first time in three weeks, EIA data showed, as firmer domestic demand and a rebound in exports outpaced higher production.
Thursday's ARA stock report from Insights Global meanwhile revealed another diesel build, reaching a fresh 11-month high as closed arbs are yet to work their way through to lower arrivals.
ARA gasoline fell 7.5% to to a four-month low.
Markets shrugged off the International Energy Agency (IEA) trimmed its forecast for 2024 oil demand growth for a second month, seeing around half the rate of expansion than that of producer group OPEC.
The IEA now sees oil demand growth this year at 1.1 million bpd, down 140,000 bpd from its April forecast, as weak deliveries – especially diesel – helped push first-quarter OECD demand into contraction.
