Investing.com-- Oil prices steadied in Asian trade on Friday, taking some support from positive U.S. gross domestic product data, but concerns over sluggish demand conditions in Asia put crude on course for a third week of losses.
Brent oil futures expiring in September steadied at $82.38 a barrel, while West Texas Intermediate crude futures rose slightly to $81.41 a barrel by 21:07 ET (01:07 GMT).
Strong US GDP, rate cut hopes offer some support
Gross domestic product data showed on Thursday that the U.S. economy grew more than expected in the second quarter, despite pressure from high rates and relatively sticky inflation.
The reading drove up hopes that the world’s biggest fuel consumer was headed for a “soft landing,” where economic growth remained steady while inflation eased.
This notion sparked increased optimism over a potential interest rate cut by the Federal Reserve in September. PCE price index data- the Fed’s preferred inflation gauge- is set to offer more cues on this front on Friday. The reading comes just days before a Fed meeting where some officials have called on the bank to begin cutting rates.
Data showing steady drawdowns in U.S. oil inventories also offered some positive cues to oil markets, as fuel demand in the country remained robust amid the travel-heavy summer season.
Oil set for third straight week of losses
Still, Brent was down about 0.3% this week, while WTI was set to lose nearly 2% amid persistent concerns over slowing growth and demand in top importer China.
Beijing unexpectedly cut a swathe of lending rates this week, further trying to loosen monetary policy amid growing concerns over sluggish growth in the country.
Oil’s downturn was in part triggered by GDP data from last week, which showed the Chinese economy grew less than expected in the second quarter.
Apart from China, uncertainty over Japan also grew following middling inflation data from Tokyo.
A softer-than-expected reading on core inflation saw investors doubt whether the Bank of Japan will have enough headroom to hike interest rates next week. Any delay in a hike reflects lesser confidence in the Japanese economy.
Speculation over a ceasefire between Israel and Hamas also weighed on oil prices, amid reports from the White House stating that the U.S. was close to brokering a deal. This kept traders from pricing in a risk premium into oil prices.