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Oil Prices Rise On Brief Respite From Economic Concerns, Hope For Supply Cuts

Published 2019-08-22, 07:53 a/m
Updated 2019-08-22, 08:35 a/m
© Reuters.

© Reuters.

Investing.com - Oil prices rose on Thursday as an unexpected increase in business activity in the euro zone gave traders some respite from economic worries as they await further stimulus from central banks, while hopes that OPEC has room for further supply cuts supported sentiment.

New York-traded West Texas Intermediate crude futures gained 52 cents, or 0.9%, to $56.20 a barrel by 7:48 AM ET (11:48 GMT), while Brent crude futures, the benchmark for oil prices outside the U.S., advanced 50 cents, or 0.8%, to $60.80.

Business activity in the euro zone unexpectedly picked up in August, according to a preliminary survey from IHS Market.

Growth remained muted but the better-than-expected reading may have provoked some temporary relief for oil markets that have been pummeled by increasing worries over a global slowdown.

Federal Reserve Chairman Jerome Powell’s speech at Jackson Hole on Friday may go further to allaying the market's fears if he spells out a path of multiple interest rate cuts down the line. Such an outlook could weaken the dollar, making the dollar-denominated commodity cheaper for the rest of the world.

But Jeffrey Halley, analyst at Oanda, warned that the danger was of disappointment.

“With positioning in equities, bonds and energy all heavily weighted to this outcome, the resulting correction from a lack of Powell love could be both ugly and emotional,” he said in a note.

Elsewhere, Reuters' report cited OPEC data showing that its share of global oil supply had fallen to 30% its lowest in a decade., but the agency concluded the cartel won't be stampeded into changing output policy as a result.

SEB strategists said however that the actual loss of market share has been suffered by Iran and Venezuela, rather than the bigger players Saudi Arabia, Russia and Iraq. Iraq is currently pumping above its agreed output ceiling, while Russia increased its output by an average of 180,000 barrels a day this month from July levels, according to UBS commodity strategist Giovanni Staunovo.

In other energy trading, gasoline futures rose 0.7% to $1.7063 a gallon by 7:50 AM ET (11:50 GMT), while heating oil gained 0.5% to $1.8664 a gallon.

Lastly, natural gas futures traded down 0.5% to $2.160 per million British thermal unit.

-- Reuters contributed to this report.

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