Investing.com — Friday’s decline in oil prices was due to an unexpected rise in U.S. inflation in May. This raised concerns about an economic slowdown. However, the market continues its positive trend supported by strong demand from the United States.
Futures were trading 0.3% less at $121.12 per barrel by 9:20 ET (1320 GMT) while contract prices fell 0.4% to $122.57 per barrel.
Brent posted a fourth straight weekly gain, while WTI recorded its seventh consecutive week-end increase. Prices overall have been climbing over the last two months.
U.S. gallon prices were 0.4% lower at $4.2580/gallon
American inflation rose by 1.0% in April. That brings it to an annual high of 8.6%. The rise has shattered hopes that rising living costs have peaked.
This suggested that the , which meets next week, will have to continue with its aggressive tightening path for a prolonged period, potentially weighing heavily on the country’s economic growth.
Also weighing was the news that parts of Shanghai have imposed new partial restrictions after China’s largest economic hub recorded a cluster outbreak of COVID-19 cases, just over a week after the country’s most populous city ended an economically damaging two-month lockdown.
The overall mood in the crude oil market is positive. There’s strong demand in summer for gasoline and diesel in the U.S., which has led to gasoline prices climbing up to almost $5/gallon.
The U.S. released data on Wednesday showing that gasoline stockpiles fell by 812,000 bls. Last week’s figures put gasoline inventories closer to what is seen at end of driving season and not beginning.
Additionally, consumption in China, the world’s biggest crude importer, could jump 12% in the third quarter compared with the second, according to China National Petroleum Corp.
Last week, the Organization of the Petroleum Exporting Countries agreed with its allies to raise their July and August output. However, the OPEC+ group has had difficulty implementing the earlier announced production increases and there are concerns that this proposal will increase the global supply.
Additionally, Norwegian oil production faces a potential disruption if workers go on strike over pay on Sunday, while the threat of ‘secondary sanctions’ by the U.S. on the Russian energy industry has increased after U.S. Republican Congressmen introduced a bill that would bar federal agencies from dealing with anyone who still has business ties to sanctioned Russian entities.
The session will include data on the U.S. number of oil rigs. These are normally due in the later part of the session.