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Brent crude and U.S. benchmark crude oil prices gained well over 1% in thin Monday trading, with international inflation data and the potential for rate cuts globally taking center stage on Memorial Day weekend, with U.S. and London markets closed for the holiday.
At 12:48 p.m. ET on Monday, Brent crude was trading at $83.07, up 1.16% on the day, while West Texas Intermediate (WTI) was trading at $78.68, up 1.24% on the day.
Asian and European stock markets also benefited on Monday, with some renewed optimism about rate cuts after the U.S. Federal Reserve last week dulled markets by seeking more time to make sure that inflation was really on track for the 2% target.
Strengthening optimism that the European Central Bank, which meets on June 6, could make positive moves towards a rate cut have also buoyed stocks and oil prices.
The governor of the Bank of Finland, Olli Rehn, who is also the European Central Bank (ECG) governor, helped matters on Monday by suggesting that rate cuts could begin in June because inflation was closing in on its 2% target across the euro zone and that the drop in inflation was “sustained”.
“Thanks to this disinflationary process, inflation is converging to our 2% target in a sustained way, and the time is thus ripe in June to ease the monetary policy stance and start cutting rates,” Rehn said.
“This obviously assumes that the disinflationary trend will continue and there will be no further setbacks in the geopolitical situation and energy prices,” he added.
For April, Euro zone inflation was 2.4%, the seventh consecutive month in which it remained below 3%, with May figures due out on Friday this week expected to be highly anticipated by markets.
By Michael Kern for Oilprice.com
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