Crude Oil Trading Alert: Oil prices rise nearly 2% as US retail sales data drags down dollar
During the Asian session on Friday (February 16), US crude oil fluctuated within a narrow range and is currently trading around $78.17 per barrel. Oil prices rose nearly 2% on Thursday after US retail sales data triggered a sell-off in the dollar, providing a rebound for oil prices, but investors focused on an International Energy Agency (IEA) report suggesting demand growth will is slowing down this year. Wednesday’s high broke more than two weeks.
Brent crude oil futures closed up $1.26, or 1.5%, on Thursday, settling at $82.86 a barrel. US crude oil futures rose $1.39, or 1.8%, on Thursday to settle at $78.03.
The dollar index fell about 0.43% on Thursday after data showed US retail sales fell more than expected in January. A weaker dollar usually boosts oil prices, which makes oil cheaper for investors holding other currencies.
The US Commerce Department’s Bureau of Statistics said retail sales fell 0.8% month-on-month in January, the biggest drop since March 2023. December data was revised down to an increase of 0.4%, compared with a rise of 0.6 % in the previous month.
The data sparked optimism that the Federal Reserve would cut interest rates early, which could have a positive impact on oil demand.
Phil Flynn, analyst at Price Futures Group: “The possibility of a rate cut is back, which gives us some boost.”
However, the IEA said on Thursday that global oil demand growth is losing momentum and demand growth will slow to 1.22 million barrels per day by 2024, about half of last year’s increase. This limits oil prices from rising further.
The IEA also widened its forecast for production growth in 2024, predicting that global crude oil production will increase by 1.7 million barrels per day, compared to the previous forecast of 1.5 million barrels per day. The IEA currently expects global crude oil production to expand to a record 103.8 million barrels per day, driven by increased production from non-OPEC entities, mainly the United States.
US oil and Brent fell more than $1 on Wednesday, with US refinery volumes falling to the lowest level since December 2022 and crude oil inventories rising; The US Energy Information Administration showed that changes in crude oil inventories increased during the week to February 9 by 12.018 million barrels to 439.5 million barrels. The market expected an increase of 2.56 million barrels, compared to the previous change of 5.521 million barrels.
News that two major economies, the United Kingdom and Japan, have begun to slide into recession, also weighs on oil prices. The British economy will enter recession in the second half of 2023. This background is quite difficult for Sunak. Japan’s economy unexpectedly fell into recession at the end of 2023, losing the title of the world’s third-largest economy to Germany and raising doubts about when the Bank of Japan would begin to exit its decade-long ultra-loose monetary policy.
Friday focuses on financial data and events (Beijing time)
①08:00 Fed Bostic delivers a speech
②15:00 Monthly UK retail sales rate after seasonal adjustment in January
③15:45 France January CPI monthly rate
④21:00 Federal Reserve Barkin delivers a speech
⑤21:30 Canadian December wholesale sales monthly rate, US January PPI annual rate and monthly rate, January US total new housing starts annual, January US total building permits
⑥22:10 Federal Reserve Board Governor Barr delivers a speech
⑦23:00 February US annual inflation rate expectation, initial value of the US University of Michigan consumer confidence index
⑧ The next day at 01:10, Fed Chairman Daley delivered a speech
⑨ The next day at 02:00, the total number of oil drilling rigs in the United States for the week to February 16
At 08:00 Beijing time, US crude oil was currently trading at $78.15 per barrel.
#Crude #Oil #Trading #Alert #Oil #prices #rise #retail #sales #data #drags #dollar #FX678
