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Oil close to equilibrium, US demand offsets fear of rate hikes

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(New York) Oil prices ended close to balance on Thursday, first sapped by fears of further rate hikes from the Federal Reserve (Fed) before being boosted by good news from U.S. demand for oil. refined products.

The price of a barrel of Brent from the North Sea for September delivery ended down slightly by 0.16%, at 76.52 dollars.

Its American equivalent, the West Texas Intermediate (WTI), with maturity in August, nibbled away one cent (0.01%), at 71.80 dollars.

Operators first reacted to figures from the ADP cabinet report, which reported 497,000 job creations in June, more than double what economists expected (220,000), a peak since February. 2022.

The figure “reinforced fears that the Federal Reserve would raise rates, which would slow the economy and oil demand,” said Phil Flynn of Price Futures Group.

“It instilled fear in the oil market,” the analyst explained, “and prices took a dive. »

The market now assigns a probability of almost half (46%) to the scenario of two additional rate hikes by the end of the year, an assumption deemed far-fetched a month ago.

But after dropping to more than 2%, WTI recovered on the back of another report, that of the US Energy Information Agency (EIA), which showed a volume of refined products shipped in the United States at a six-month high in the week ended June 30.

Over four weeks, the indicator most followed by analysts, the products delivered, which reflect American demand, are 3.5% higher than their level last year at the same time.

This data is “extremely supportive of price action,” Flynn said. “So after the initial slide, the market rallied,” ending up close to equilibrium.

Operators particularly noted the acceleration in demand for gasoline, which had not reached these volumes since October 2021.

“Demand is very strong,” Phil Flynn hammered home, despite fears of a coming downturn.

However, Thursday’s footage “puts even more emphasis on the monthly jobs report” from the US Department of Labor, due Friday and deemed more reliable than ADP data. “If he confirms these incredible job creations, the [black gold] market could take fright. »

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