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WTI Challenges $80 Again on Strong Economic Data

U.S. crude oil prices pushed past $80 on Friday, with the global benchmark Brent crude also enjoying its first weekly gain since mid-April on Chinese industrial output data and U.S. consumer prices, both of which came in more favorably than anticipated for April. 

On Friday at 4:20 p.m. ET, West Texas Intermediate (WTI) was trading a penny shy of $80, and had surpassed $80 earlier in the afternoon. Brent crude was trading at $83.91, up 0.77% on the day. 

The April U.S. Consumer Price Index (CPI) released on Wednesday showed a 0.3% increase from March, lower than the Dow Jones estimate of 0.4%. This data lent more optimism to the potential for the Federal Reserve to cut interest rates, with some speculating that rate cuts could start as early as September, according to CNBC. 

Also boosting oil prices was Chinese economic data released earlier on Friday. Official data cited by Reuters showed China’s industrial output growing 6.7% year-on-year in April, up from 4.5% in March and beating expectations of a Reuters poll of analysts of 5.5%.

Both sets of economic data provide strong tailwinds for oil demand. 

This week, gasoline prices in the U.S. continued to fall as oil prices remained low, with the national average price per gallon at $3.597 on Friday, down over four cents on the week. according to AAA, but still about 7 cents higher than this same time last year. 

Last week, gas demand rose mildly from 8.79 million barrels per day to 8.87 bpd, with U.S. stockpiles reporting a small draw against the backdrop of what AAA calls “lackluster pre-Memorial Day demand”. 

 "Barring some unforeseen event, this pokey drop in pump prices is not likely to change anytime soon," said Andrew Gross, AAA spokesperson. "There are seven states with county gas averages at less than $3 a gallon. This trend will likely accelerate as more gas outlets east of the Rockies drop their prices."

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By Tom Kool for Oilprice.com

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  • Mamdouh Salameh on May 18 2024 said:
    The strong economic data seems always to come from China with its industrial production higher in April by 6.7% than during the same period in 2023 and up 4.5% from March.

    Compare this with a 0.3% rise in the consumer price index (CPI) in the United States leading to a possible cut in Federal interest rates by September.

    The quality and impact of Chinese economic data leave those of the US far behind.

    Based on sold market fundamentals, robust global oil demand and Chinese economic data, Brent crude is expected to range from $90-$100 a barrel sometime during 2024 even without the impact of geopolitical factors.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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