Investing.com — The stars seem aligned for oil bulls’ wish to have a barrel priced at no less than $80.
New York-based West Texas Intermediate, or , for delivery in September hit a three-month high of $79.82, extending oil’s four-week rally. At 13:00 ET (17:00 GMT), the U.S. crude benchmark was up 76 cents, or 1%, to $79.50. The U.S. crude benchmark has risen 12.5% so far for this month.
London-based surged to an April high of $83.28 before trading at around $83.06, up 58 cents, or 0.7%.
Tuesday’s rally was helped partly by the IMF’s raising of its forecast for world economic growth to 3% from 2.8%.
“The outlook for global growth is the key for the crude demand outlook and right now it seems that might only get better as we get more stimulus out of China and as soft landing hopes grow for the U.S.,” said Ed Moya, analyst at online trading platform OANDA.
China’s top leaders pledged on Monday to step up policy support for the economy amid a tortuous post-COVID recovery, focusing on boosting domestic demand, signaling more stimulus steps. Beijing will step up economic policy adjustments, focusing on expanding domestic demand, boosting confidence and preventing risks, state news agency Xinhua cited the Politburo, a top decision-making body of the ruling Communist Party, as saying.
“WTI crude will likely face key resistance from the $80 level, which means the recent rally might consolidate until we get beyond the FOMC decision,” Moya added.
Inflation, as measured by the , hit a four-decade high of 9.1% per annum in June 2022 in the aftermath of the coronavirus pandemic and the trillions of dollars of relief spending for that.
The Federal Reserve’s policy-making board, known as the Federal Open Market Committee, or FOMC, responded by raising interest rates aggressively, adding a total of 5% in 10 installments to the prior rate of 0.25%.
Inflation subsequently eased, falling to as low as 3% in the Consumer Price Index reading for July. But that is still well above the Fed’s long-term target of 2%, with officials at the central bank saying they feared renewed spikes if consumers start spending big again.
The Fed is supposed to decide again on rates on Wednesday, with economists saying there was a of the central bank adding another quarter percent to rates.
Market participants were also on the lookout for U.S. weekly oil inventory data, due after market settlement from API, or the American Petroleum Institute.
The API will release at approximately 16:30 ET (21:30 GMT) a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended July 21. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday.
For last week, analysts tracked by Investing.com expect the EIA to report a drop of 2.4 million barrels, versus the 0.708M barrel reduction reported during the week to July 14.
On the front, the consensus is for a build of 0.146M barrels over the 1.066M decline in the previous week. Automotive fuel gasoline is the No. 1 U.S. fuel product.
With , the expectation is for a drop of 0.075M barrels versus the prior week’s gain of 0.014M. Distillates are refined into , diesel for trucks, buses, trains and ships and fuel for jets.
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