Crude prices benefited from a large, unexpected drop in U.S. oil stockpiles and softer inflation data.
Softer producer price index data heightened expectations for a September 50-basis point Fed rate cut.
Meanwhile, U.S. oil inventories fell by 5.2 million barrels, well beyond the anticipated two million. However, the market could remain under pressure as demand forecasts are revised down.
Looking ahead, today’s U.S. inflation data might add volatility to oil prices. Inflation is expected to remain steady for July. Lower-than-expected inflation could support oil prices as a softer monetary policy could support demand. Tomorrow’s U.S. retail sales report for July could also impact crude pricing.
A rebound in retail sales might further support the oil market.
Crude prices also find support on the back of ongoing geopolitical tensions in the Middle East while the situation remains volatile.
