(LONDON) Oil prices were catching their breath on Friday, profit-taking coming after a week of outright price gains, driven by supply tensions and favorable economic indicators in the United States.
Around 5:40 a.m., a barrel of Brent from the North Sea, for delivery in September, lost 0.38% to 83.92 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery the same month, fell 0.27% to 79.87 dollars.
The day before, the two world crude references hit their highest price in three months.
“The supply cuts announced by Saudi Arabia, along with reduced exports from Russia, had the intended effect of higher benchmark prices,” said Exinity analyst Han Tan.
Crude prices also benefited from “bets that the Fed is nearly done with the current rate hike cycle, as well as the growing odds of a soft landing for the US economy,” he continued.
On Wednesday, the US Federal Reserve raised its main key rate by a quarter of a percentage point, but officials of the institution did not indicate whether they thought of raising them further in the coming months.
And U.S. growth defied pessimistic forecasts, accelerating in the second quarter. From May to June, gross domestic product (GDP) growth was 2.4% at an annualized rate, compared to 2.0% in the first quarter, according to figures released Thursday.
If economists are still divided, the world’s largest economy could escape recession this year.
While the recent price hike appears to have led to a technical pullback, prices could rally higher in early August as the market awaits news of a possible extension of Saudi Arabia’s production cuts.
“If so, the oil market would be even more undersupplied in the third quarter, which would give a further boost to oil prices,” insists Carsten Fritsch of Commerzbank.
