Oil prices rise amid OPEC+ decision, strong US demand data

By Duygu Alhan

Oil prices rose on Friday, driven by the OPEC+ group’s decision to delay a planned production increase, stronger-than-expected US demand data, and ongoing uncertainty about the US Federal Reserve's future interest rate cuts.

Brent crude, the international benchmark, increased by 0.33% to $72.94 per barrel at 10:42 a.m. local time (0732 GMT), up from the previous session's close of $72.70. Meanwhile, US benchmark West Texas Intermediate (WTI) rose by 0.20% to $69.05 per barrel, after closing at $68.91 the day before.

The postponement of the OPEC+ production increase, initially set for October, provided support for prices as it raised concerns about global oil supply. The group, which includes OPEC members and non-OPEC producers, took the decision in response to falling oil prices.

Additionally, data from the US Energy Information Administration (EIA) released late Thursday showed a significant drop in US crude oil inventories. US commercial crude stocks fell by 6.9 million barrels to 418.3 million barrels for the week ending August 30, far exceeding market expectations of a 600,000-barrel decline. This stronger-than-expected demand helped push oil prices upward.

Uncertainty surrounding the Federal Reserve’s next moves on interest rates also added to market volatility. While it is widely anticipated that the Fed will cut interest rates by 100 basis points by the end of the year, estimates for a 50-basis-point cut in September stand at 43%.

A potential interest rate cut is expected to weaken the US dollar, which could in turn increase demand for oil. On Friday, the US dollar index fell by 0.24% to 100.89, compared to the previous trading session.