(London) Oil prices were moving in the green on Friday, driven by rising geopolitical tensions and the prospect of a slowdown in American inflation which could reinforce the probability of a rate cut this year, favorable to the request.
Around 6:35 a.m. (Eastern time) (12:35 p.m. in Paris), the price of a barrel of Brent from the North Sea, for delivery in August, which is the last day of trading, increased by 0 .75% to $87.04.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery the same month, rose 0.80% to $82.39.
By focusing on “risk,” investors are driving crude prices, DNB analysts say, particularly due to geopolitical tensions in the Middle East.
Fears of an extension of the war between Hamas and Israel have increased after an escalation of violence on the Israeli-Lebanese border and threats.
Attacks by Hezbollah, an ally of Hamas, against Israeli positions and those of the Israeli army against targets in Lebanon continued, with the Lebanese movement reporting the deaths of four fighters.
The market is also banking on an increase in seasonal demand, add DNB experts.
Furthermore, the PCE inflation index for May, the barometer favored by the American central bank to guide its monetary policy, is expected to slow slightly over one year, according to analyst consensus.
The figure is likely to show “a weakening of inflationary pressures in the US economy, increasing the likelihood of rate cuts later this year,” points out SEB’s Bjarne Schieldrop.
However, a rate cut would be “positive for the economy and the markets in general” and therefore “for oil demand” and its price, the analyst concludes.
Usually a bearish factor, American crude oil stocks increased sharply during the week ended June 21, according to the American Energy Information Administration (EIA), but investors largely ignored this data, notes Tamas Varga, from PVM Energy.
The analyst cites other “factors boosting the price of oil,” such as “ongoing weather-related issues in Ecuador […] eliminating 100,000 barrels per day of production.”
The country was forced to pause operations in several of its oil wells due to heavy rains.