Oil Prices Remain Stable After The Release Of US Inflation Data

Global oil benchmark Brent hovered above USD 80 a barrel on Thursday, fuelled by US inflation data that presaged the interest rate hike cycle in the world's biggest economy is set to finally cool.

Data released on Wednesday showed US consumer prices rose modestly in June and registered their smallest annual increase in more than two years as inflation continued to subside.

Markets expect one more interest rate rise before the US rate-hiking cycle has likely peaked. Higher rates can slow economic growth and reduce oil demand.

Oil prices have rallied around 12 per cent in two weeks, primarily in response to supply cuts from top producers Saudi Arabia and Russia, noted Craig Erlam, senior market analyst at OANDA.

"Some profit-taking at these levels wouldn't be hugely surprising and may have come sooner if not for the US consumer price inflation data."

Brent crude futures were up 22 cents to USD 80.33 per barrel by 0819 GMT, while US West Texas Intermediate crude futures were up 11 cents at USD 75.86.

Meanwhile, a report by the International Energy Agency (IEA) on Thursday predicted oil demand would hit a record high this year, but that broader economic headwinds and interest rate hikes would temper the increase to be slightly less than anticipated.

In China, for instance, momentum in post-pandemic recovery slowed with exports contracting last month at their fastest pace since the onset of the pandemic three years ago, the country's Customs Bureau showed on Thursday.

However, there were silver linings in the number of crude imports in June, jumping 45.3 per cent on the year and hitting its second-highest monthly figure on record, the report showed.

Another factor capping price gains was a US Energy Information Administration report of a much bigger-than-expected US crude stock build of nearly 6 million barrels last week.

Gasoline inventories remained largely unchanged at 219.5 million barrels during the Fourth of July holiday week, a situation that is "almost unheard of," said Phil Flynn, an analyst at Price Futures Group.

Analysts had expected a big drawdown of gasoline stocks as drivers took to the roads for holiday travel.