Arunima Kumar
BENGALURU (Reuters) – Oil prices rose on Friday and are on track to post a third straight weekly gain, buoyed by growing expectations that the U.S. Federal Reserve will soon start cutting interest rates and by a U.S. inflation reading due later in the day.
Brent crude futures for August delivery, expiring on Friday, rose 54 cents, or 0.63%, to $86.93 a barrel as of 8:45 a.m., while the more liquid September Brent crude contract was up 0.7% to $85.87 a barrel.
U.S. West Texas Intermediate crude oil futures for August delivery rose 61 cents, or 0.75%, to $82.35 a barrel.
Brent and WTI crude futures have risen nearly 2% this week and both benchmarks are expected to rise by more than 6% from the previous month.
US personal consumption inflation data, the Federal Reserve’s preferred inflation gauge, is due to be released at 12:30 GMT.
“The interest rate market is expecting two Fed rate cuts by the end of the year and the pricing data will test whether expectations are overly dovish,” said Yep Jun Rong, market strategist at IG.
Growing expectations that a rate-cutting cycle from the Federal Reserve is imminent have sparked risk aversion across the stock market. Traders now see a 64% chance that the Fed will make its first rate cut in September, up from 50% a month ago, according to CME FedWatch.
Lower interest rates could be a boon for oil as it could increase consumer demand.
A recovery in physical refining margins also buoyed the market, with refining margins at the Singapore complex averaging $1 higher in June than in May, to about $3.60 a barrel.
Fluctuations in the U.S. dollar, which is at a two-month high, and caution over political uncertainty in France capped gains.
(Reporting by Arunima Kumar in Bengaluru, Shariq Khan in New York and Trixie Yap in Singapore; Editing by Kim Coghill and Jason Neely)