Oil prices have increased slightly as tightness in supplies outweighed slowing demand growth ahead of Federal Reserve chairperson Jerome Powell’s speech on monetary policy.
Brent crude LCOc1 jumped $0.29, or 0.5%, to reach $60.21 per barrel, while US crude futures CLc1 rose by $0.18, or 0.3%, to touch $55.53, Reuters reported. Both contracts are set to post weekly gains for the second consecutive week.
OANDA senior market analyst Jeffrey Halley was quoted by the news agency as saying: “Oil is set to trade quietly today as it’s all about the Jackson Hole (meeting) tonight.”
Markets are closely watching what Jerome Powell will speak on 23 August when he will address a symposium of global central bankers in Jackson Hole, Wyoming. The speech is expected to reveal the Fed’s position on the possibility of a second rate cut this year to give a fillip to the US economy.
The growing attention on the meeting comes after two Fed officials indicated on 21 August 2019 that a rate cut is not likely.
CMC Markets chief market analyst Michael McCarthy said: “If Powell talks about lower for longer and reverses some of the hawkish comments that we heard from Fed members earlier this week, we could see it supporting oil.”
In July 2019, Brent crude prices slipped and have not recovered to comfortable levels to date amid economic concerns due to the ongoing trade spat between the US and China. The prices have taken a hit after the International Energy Agency (IEA) and producer cartel the Organization of the Petroleum Exporting Countries (OPEC) cut global oil demand growth forecasts.
The OPEC monthly report earlier in August 2019 cut the forecast for 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd.
On the other hand, prices have received some support from output cuts by OPEC and Russia. Supply cuts from Iran and Venezuela as a result of US sanctions is another crucial factor that has prevented the prices from crashing further.