Brent fluctuates: US rate cut hopes vs demand worries from China

• Oil prices rose Thursday on US rate cut hopes
   
• Fed rate cut could boost US economy and oil demand
   
• July inflation points to potential September rate cuts
   
• Global demand worries, especially China
   
• IEA, OPEC cut forecasts; Middle East turmoil persists

Oil prices rose modestly on Thursday, recovering earlier losses on optimism over possible interest rate cuts in the U.S., which could boost economic activity and demand for crude.

However, the market remains pressured by ongoing concerns over weakening global demand, particularly from China.
 

Recent data has bolstered expectations that the Federal Reserve will cut interest rates, which could boost the U.S. economy and increase demand for crude oil.

U.S. consumer prices rose slightly in July, with the annual inflation rate falling below 3% for the first time in more than three years.

At the time of writing, the market is pricing in a 72.5% probability of a 25 bps cut in September (source: CME FedWatch Tool).

Concerns about global demand, particularly from China, continue to limit potential gains.

The International Energy Agency (IEA) and OPEC have both downgraded their oil demand forecasts, citing China's economic slowdown.

However, geopolitical turmoil in the Middle East continues and could have a significant impact on oil price dynamics.