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Oil Prices Steady Ahead of Key US Inflation Data, OPEC+ Meeting

Oil prices maintained stability on Friday, as investors awaited the release of significant U.S. inflation data and the impending meeting of major crude producers over the weekend.

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At 05:15 ET (09:15 GMT), Brent oil futures edged up by 0.2% to $82.05 a barrel, while West Texas Intermediate crude futures experienced a slight increase of 0.1% to $78.00 a barrel.

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China PMIs Disappoint, Adding to Demand Concerns

On Friday, purchasing managers index data revealed that Chinese manufacturing activity unexpectedly contracted in May, while non-manufacturing activity expanded at a slower rate than anticipated.

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These figures suggested a cooling of Chinese business activity following a brief resurgence over the past two months, heightening worries about sluggish demand in the world’s largest oil importer.

The data also underscored concerns that despite significant stimulus measures from Beijing, the Chinese economy had received only limited support, prompting calls for additional supportive measures.

US Inventories Decline, but Product Build Raises Demand Jitters

The weekly supply data from the U.S. Energy Information Administration, released on Thursday following the Memorial Day holiday, presented a mixed picture for the crude market.

While U.S. oil inventories saw a larger-than-expected drawdown of nearly 4.2 million barrels for the week ending May 24, gasoline inventories surged by 2 million barrels, surpassing expectations, and distillate inventories grew by 2.5 million barrels against forecasts.

The increase in product inventories raised concerns about sluggish demand in the world’s largest fuel consumer ahead of the summer travel season.

Focus on US Economic Growth and Inflation Data

Fears of slowing U.S. economic growth heightened after revised gross domestic product (GDP) figures revealed that the U.S. economy expanded less than initially anticipated in the first quarter.

Attention now turns to the upcoming Personal Consumption Expenditures (PCE) price index data, the Federal Reserve’s preferred inflation gauge, which is expected to influence the central bank’s stance on interest rates.

Expectations of prolonged high U.S. interest rates have weighed on oil prices recently, amid concerns that elevated rates could dampen economic activity and hinder oil demand in the coming months.

Inflation data from Europe provided some upside surprise, with eurozone Consumer Price Index (CPI) rising by 2.6% annually in May, surpassing the previous month’s figure of 2.4%. Additionally, core CPI, excluding volatile food and energy prices, increased by 2.9% annually, exceeding April’s 2.7%.

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