Oil Rises As Traders Ignore Mixed Demand Signals And Bet On Fed Rate Cuts

Meanwhile, European refineries brace for hot weather conditions: File Image/Pixabay

Despite the U.S. Federal Reserve remaining staunch in its refusal to cut rates even in the face of favourable economic data, crude traders hoping for cuts anyway were said to be the reason why oil prices on Thursday notched another session of modest gains.

After data revealed that U.S. consumer prices fell in June, traders priced an 89 percent probability of a rate cut in September, up from 73 percent on Wednesday.

As a result, as of 1621 GMT, Brent was up 23 cents at $85.31 per barrel, and West Texas Intermediate rose 36 cents to $82.46 per barrel.

Sentiment aside, the crude market continued to issue mixed signals regarding demand: the International Energy Agency’s latest monthly report saw global demand growth slowing to under 1 million barrels per day (bpd) this year and in 2025, partly due to a reduction in China's consumption.

But the Organization of the Petroleum Exporting Countries (OPEC) in its latest monthly report maintained its forecast for world demand growth at 2.25 million bpd for this year and 1.85 million bpd next year.

Alex Hodes, analyst at StoneX, said, "OPEC and the IEA demand forecast are wider apart than usual, partly due to the differences of opinion over the pace of the world's transition to clear fuels."

In other oil news on Thursday, summer temperatures in Greece and Poland were blamed for threatening the normal operation of refineries on those countries.

Alan Gelder, vice president of refining, chemicals and oil markets at Wood Mackenzie, told Bloomberg, “European refineries were designed in the sixties and the seventies; the world’s got hotter since then.”

According to one analyst, some refineries might be forced to cut processing rates by 15 percent over a 24-hour period at some point this summer; for the record, forecasts suggest that temperatures in Greece may top 40 degrees Celsius next week.