Oil Gains For The Week As Traders' Hopes Of U.S. Rate Cuts Ramp Up

Meanwhile, China reports uncommonly promising price index data: File Image/Pixabay

Demand worries that informed trading so heavily in recent weeks continued to be muted due to earlier-reported robust U.S. economic figures, and as a result oil on Friday achieved over 4 percent in weekly gains.

Dennis Kissler, senior vice president of trading at BOK Financial, said, "Crude is in a recovery mode ... as geopolitical tensions still seem to be a positive factor, and on-again off-again recession fears have calmed a bit, at least for now."

Brent settled up 50 cents at $79.66 per barrel and for the week notched a gain of over 3.5 percent; West Texas Intermediate settled up 65 cents to $76.84, posting a weekly gain of over 4 percent.

Traders on Fridays coasted on news earlier in the week that initial claims forU.S.  state unemployment benefits fell 17,000 to a seasonally adjusted 233,000 for the week ended Aug. 3, the biggest drop in about 11 months; also, Federal Reserve policymakers on Thursday said they were more confident that inflation was slowing enough to cut rates, although the Fed has spent most of the year refusing to make cuts despite favourable data.

Supporting Friday's trading was data from China, whose consumer price index rose last month at a slightly faster than expected rate, and this caused Pierre Veyret, technical analyst at ActivTrades, to state, "In this context, it wouldn't be surprising to see the price per barrel testing the $80 level."

As for the other recent driver of oil trading – the Israel/Hamas conflict - Phil Flynn, senior market analyst at Price Futures Group Inc., on Friday told clients in a note that the Joe Biden/Kamala Harris campaign bid to restart ceasefire talks "probably will not bear fruit: hedge funds of course have jumped on every ceasefire talk deadline to push oil prices lower, [but] at some point they may realize that the ceasefire talks are not a reason to sell more oil."

For the record, the U.S., Egypt and Qatar have demanded in a joint statement that Hamas and Israel return to the negotiating table.

In other oil news on Friday, shipping sources and data suggested that Iran has found new buyers of its crude oil, with cargoes recently tracked to move to Oman and Bangladesh; despite the U.S. sanctions, the Islamic republic's oil production was recently estimated to have hit its highest level since 2018.