Crude oil prices set for weekly gain as latest data on US economy dispels recession fears

Crude oil prices were set for weekly gain as fresh set of data released on the US economy dispelled the fears of recession in the world's largest oil consumption market.

Although the prices edged lower in early trade on Friday, August 16, the rate of benchmarks was significantly higher as compared to the preceding week.

Brent, the global crude benchmark, was trading 0.17% lower at $80.9 per barrel at 0220 hours GMT. On a weekly basis, it was set to advance by 1.6%.

The US West Texas Intermediate (WTI), which is the American crude benchmark, was trading 0.29% lower at $77.9 a barrel. However, the rate was on track to mark a weekly gain of 1.5%.

The turnaround

Crude oil prices, which were hovering around $82-$85 per barrel, slipped sharply after data released a fortnight ago stoked fears of recession in the US economy. The country's unemployment rate in July rose to 4.3%, the highest since October 2021; and the weekly jobless claim filings at the end of the month had risen to 240,750, which was the highest in a year.

The jitters around the US economy were eased this week, as data released by the commerce department showed retail sales rising 1% month-on-month in July. This was the highest growth since January 2023, and surpassed the analysts' estimate of a 0.3% climb.

Data related to the weekly unemployment filings, released on Thursday, also eased the market sentiment as the weekly jobless claims dropped to 227,000, lower than the Reuters' estimate of 235,000.

The latest set of data will provide relief to the commodities market, experts said, adding that the major determinants for the oil prices will now be the geopolitical developments emerging from the Middle East, and the demand from China. Although China is the biggest oil importer, the country's demand has remained tepid in the post-Covid-19 period.