Oil rises following upward revision of US GDP

The front-month ICE Brent contract gained $1.14/bbl to settle at $86.39/bbl on Thursday after the US Commerce Department revised upward its consumer spending estimates for the first quarter.

PHOTO: Oil barrels on US dollar bills. Getty Images

Brent's price found some support after the US Commerce Department’s Bureau of Economic Analysis (BEA) revised the Gross Domestic Product (GDP) growth rate for January-March to 1.4% in its third estimate.

This revision marks a slight increase from the previously estimated 1.3% growth rate.  

Oil prices reacted positively to the news as it showed the country’s economic growth in the first quarter of this year was better than previously estimated. This has also supported the market’s expectation of a sooner-than-expected interest rate cut.

Oil market investors are now awaiting the release of US inflation data for June to get more insight into the country's oil demand growth. The data, scheduled for release later today, will help understand the Federal Reserve’s (Fed) likely approach to interest rate cuts this year.

Higher interest rates can dampen oil demand growth as it makes the greenback stronger for dollar-denominated commodities like oil.

“Sentiment in the broader financial markets is in a holding pattern ahead of a key US inflation report due out later today,” VANDA Insights’ founder and analyst Vandana Hari said.

By Aparupa Mazumder 

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