Oil rises, markets tread water before key inflation data

AFP , Tuesday 28 May 2024

Oil prices rose Tuesday on tensions in the Middle East while stock markets wavered as investors awaited key inflation data later this week.

A oil pumpjack is silhouetted against a threatening sky as a spring storm packing high winds and hea
A oil pumpjack is silhouetted against a threatening sky as a spring storm packing high winds and heavy rains sweeps across Colorado eastern plains. AP


Brent North Sea Crude rose 1.1 percent to $84.03 per barrel, while West Texas Intermediate added 2.6 percent to $79.72 per barrel.

Meanwhile, Wall Street had a mixed day as investors returned from the three-day Memorial Day weekend.

"There appears to be some post-holiday lethargy," said Briefing.com analyst Patrick O'Hare.

But he did highlight a 5.7 percent gain for AI chip designer Nvidia on excitement at the news Elon Musk's AI startup, xAI, has raised some $6 billion in new funding for development in this booming sector.

European stocks lacked direction to end in the red, with London's FTSE 100 index closing down 0.7 percent after its long weekend, despite grocery delivery platform Ocado soaring almost 10 percent on a raised analyst outlook.

Frankfurt and Paris suffered similar losses.

"Risk sentiment has faltered in recent weeks, and global stock markets have experienced a mild sell-off as the focus shifts to a plethora of economic data that is released this week," said XTB research director Kathleen Brooks.

'Undersupplied' oil

The eurozone's May consumer prices data will be published Friday, followed by the Federal Reserve's preferred gauge for inflation, the US personal consumption expenditures (PCE) index.

The PCE index is forecast to have slowed slightly in April from the previous month.

"This scenario will solidify expectations of a Fed rate cut in September if confirmed," said ActivTrades analyst Ricardo Evangelista.

Several US policymakers warned in recent weeks that they were cautious about cutting rates too soon and wanted to see more data proving price pressures are easing.

The European Central Bank, however, is expected to act before the Fed and cut its rates in June.

In commodities, oil prices rose further before a June 2 output meeting of OPEC and other major producers. They are tipped to maintain output cuts.

"If the OPEC+ production cuts are maintained in the third quarter, the oil market is likely to be undersupplied in the summer months," said Commerzbank analyst Carsten Fritsch.

At the same time, the start of the US driving season, when many Americans hit the roads for their summer vacation, is widely expected to boost demand for motor fuel.

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