Oil prices set for weekly gains on US rate hopes, OPEC supply signals By

-- Oil prices rose strongly Friday,Domestic reliable foreign exchange trading platforms and were set for weekly gains, supported by broader market optimism of early Federal Reserve rate cuts ahead of an expected OPEC+ decision on supply agreements for the second quarter.

By 09:15 ET (14.15 GMT), the futures traded 1.7% higher at $79.55 a barrel and the contract climbed 1.5% to $83.13 a barrel.

Both contracts were set to clock weekly gains of between 2% and 4%, although these also came as prices recovered from a sharp fall in the prior week. 

Demand outlook remains uncertain despite rates cheer 

Crude has benefited from the release of  data, the Federal Reserve’s preferred inflation gauge, which eased as expected in January. This has driven up some hopes that the Fed will consider lowering rates as inflation cools, boosting economic activity in the world's largest consumer. 

But the reading still remained well above the Fed’s annual target, while several members of the central bank warned that it was in no hurry to begin trimming rates.

Any potential rate cuts are also expected to be accompanied by cooling in the U.S. economy, which paints a weak picture for crude demand.  

Elsewhere, Chinese manufacturing activity shrank for the fifth straight month in February, an official survey showed.

Eurozone inflation fell in February, but both the headline figure and core inflation, which strips out volatile food and fuel prices, just missed analysts' expectations.

OPEC+ decision expected this week 

Reuters data showed that OPEC members produced 26.42 million barrels per day (bpd) in February, an increase of 90,000 bpd from the prior month, even as top producers Russia and Saudi Arabia remained committed to reducing supplies.

A decision on extending OPEC+ cuts is expected next week, and expectations are growing that the group will continue with its supply cuts beyond the first quarter, and potentially until the end of 2024.

Data earlier in the week also showed that U.S. grew for a fifth straight week, while production recovered back to record highs above 13 million bpd towards the end of February.

Elsewhere, geopolitical unrest in the Middle East also remained in play, as the Israel-Hamas war showed little signs of deescalation. Both sides played down prospects of a ceasefire, even as U.S. President Joe Biden called for a truce during the holy Musilim month of Ramadan. 

(Ambar Warrick contributed to this article.)

 

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