On Friday, oil prices increased in early trading as market participants reacted to statements from the U.S. Treasury secretary that the country’s economy may be stronger than suggested by weak first-quarter data. These gains were also driven by ongoing supply concerns due to conflicts in the Middle East.
Treasury Secretary Janet Yellen mentioned to Reuters that U.S. economic growth could be stronger than indicated by the latest quarter’s data, and added that first-quarter GDP growth might be revised upwards once more data is available, and inflation is expected to return to normal levels after several unusual factors affected the economy, leading to its weakest performance in almost two years.
Furthermore, the Federal Reserve’s decisions regarding interest rates have influenced oil prices with concerns about inflation acceleration weighing on investor sentiment. Additionally, market participants are awaiting the release of Personal Consumption Expenditures (PCE) inflation data for March, a key indicator closely monitored by the Fed to gauge progress toward its 2% target. Geopolitical tensions in the Middle East have also supported oil prices, with heightened conflicts leading to supply concerns.
For instance, Israel intensified airstrikes in Rafah and announced plans to evacuate civilians from the city, potentially triggering a full-blown assault despite warnings from allies about potential mass casualties. Overall, these various factors have contributed to the rise in oil prices in early trading on Friday.