West Texas Intermediate (WTI) crude oil futures in New York closed higher on Friday (November 11), supported by China’s announcement to ease COVID-19 restrictions. This will support domestic oil demand. Oil futures are also supported by a weak dollar on expectations that the Federal Reserve (Fed) will slow interest rate hikes. After the US released lower than expected inflation data.
- The WTI Crude Oil contract is delivered in December. It rose $2.49, or 2.9%, to $88.96 a barrel, but was still down 3.9% for the week.
- The contract for Brent crude oil (BRENT) is delivered in January. It rose $2.32, or 2.5%, to $95.99 a barrel, but was still down 2.6% for the week.
Crude oil gains support after China signaled the opening on Friday (November 11) as it announced it would ease COVID-19 control measures. reducing the detention period for those traveling abroad Including the cancellation of the airline’s sanctions system in case a passenger is found to be infected with COVID-19.
Oil prices were also positive due to the depreciation of the dollar. This will increase the attractiveness of the contract. By making oil contracts cheaper for holders of other currencies.
The greenback fell to its lowest level in more than two months, with the dollar index, which measures the greenback against a basket of six major currencies, shedding 1.76% on Friday to 106.2950.
Furthermore, the market was also buoyed by expectations that the Fed will slow down by raising interest rates. Since the release the consumer price index (CPI), which measures inflation on consumer spending, has fallen below analysts’ expectations. This indicates that US inflation has passed its peak.
CME Group’s FedWatch tool indicates that investors weigh up to 81% on a 0.50% rate hike at its Dec. 13-14 meeting and 19% on a 0.75% hike.
By InfoQuest news agency (Nov. 12 ’22)
