Oil prices rose on Thursday morning, as investors looked past concerns about oversupply and economic growth.
Brent crude futures (BZ=F) climbed 0.5% to $65.15 a barrel, while West Texas Intermediate futures (CL=F) declined 0.3% at $63.04 a barrel.
Earlier on Thursday morning, Hargreaves Lansdown senior equity analyst Matt Britzman said oil prices had “weighed down by growing concerns of a global oversupply”.
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“Saudi Arabia is pushing for a major increase in oil production and has slashed prices for Asian buyers, signalling weaker demand,” he said.
The July price cut by Saudi Arabia, which is the world's biggest oil exporter, comes after the decision from the Organization of the Petroleum Exporting Countries and their allies — known as OPEC+ — over the week to increase output next month.
In addition, Britzman said “ongoing trade tensions are adding to market uncertainty”. There are concerns that a slowdown in the global economy due to US president Donald Trump's tariff agenda would weigh on demand for fuel.
The pound edged higher against the dollar (GBPUSD=X) on Thursday morning, rising 0.1% to trade at $1.3564 at the time of writing.
The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, hovered around the flatline at 98.85.
This followed weak US economic data on Wednesday, including a sharp slowdown in private sector hiring growth, as well as a contraction in services sector.
On the back of the weak data from ADP's private sector jobs report, US president Donald Trump renewed his call for Federal Reserve chair Jerome Powell to lower interest rates. In a post on Truth Social on Wednesday, referencing the ADP report, Trump said that “Powell must now LOWER THE RATE. He is unbelievable!!!”
Jim Reid, market strategist at Deutsche Bank (DBK.DE), said: “Both the ADP and the ISM services prints led investors to price in more rate cuts this year, with clear moves in response to the two prints.”
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“In fact by the close, futures were pricing in 58bps (basis points) of rate cuts by the Fed’s December meeting, up +8.0bps on the day, and the highest number in over three weeks. And there’s growing confidence that we’ll see the first rate cut by September, with futures now almost fully pricing (97%) one by that meeting.”
Attention now turns to the European Central Bank's (ECB) latest decision later on Thursday, with another rate cut expected to be announced.
