WTI Crude Oil extends gains after US CPI as IEA sees tightening market

Key points

Futures on US West Texas Intermediate Crude Oil extended gains on Thursday, after the latest US CPI inflation data suggested interest rates were nearing a peak.

WTI Crude rallied over 1% on Wednesday, while the US Dollar weakened, after data showed both headline and core CPI inflation in the US had decelerated more than expected in June.

Market players considered the data as an indication that the Federal Reserve might complete its rate-hiking cycle at its policy meeting later in July.

WTI Crude Oil Futures have surged over 10% in the past two weeks, mostly underpinned by output cuts announced by top producers Saudi Arabia and Russia.

In other news, the International Energy Agency said in its monthly oil report that oil demand was poised to reach a record high of 102.1 million barrels per day this year.

The oil market is tightening, the energy watchdog said, as demand is set to exceed supply for the remainder of 2023.

China is expected to account for over two-thirds of 2023 demand growth as its post-COVID economic recovery is due to accelerate, especially later in the year.

“China’s widely anticipated reopening has so far failed to extend beyond travel and services, with its economic recovery losing steam after the bounce earlier in the year,” the IEA said in its report.

Meanwhile, data by China’s Customs Bureau showed earlier on Thursday that June exports had shrunk at their fastest rate (12.4% YoY) since the beginning of the COVID-19 pandemic.

As of 12:12 GMT on Thursday WTI Crude Oil Futures for August delivery were edging up 0.12% to trade at $75.85 per barrel.

At the same time, Brent Oil Futures for September delivery were edging up 0.15% on the day to trade at $80.20 per barrel.