Crude oil bounces as Fed rate cut hopes outrank demand worries (NYSEARCA:USO)

Crude oil futures ended a five-session losing streak on Wednesday, as renewed hopes for a Federal Reserve interest rate cut in September outweighed concerns about demand after data showed a build in US crude oil and fuel inventories.

US Treasuries rose on Wednesday afterward Private jobs data from ADP showed a slowdown in hiring, with companies adding 152,000 fewer jobs than expected in May after a downwardly revised 188,000 jobs in April.

The yield on two-year Treasuries fell 4 basis points to 4.73%, falling 25 basis points over the past five sessions in the longest period of decline in four years, while 10- and 30-year interest rates ended at their lowest levels since March 28. And 4.29% and 4.44%, respectively, after also declining for five consecutive trading days.

According to the CME FedWatch tool, traders now see a roughly 67% chance of a Fed rate cut by September, compared to less than 50% last week.

“The data outside the oil world has been weak enough Giving cover for the Fed to eventually cut interest rates “And stimulate some growth,” John Kilduff of Again Capital told Reuters.

Major oil indexes rebounded after closing Tuesday at their lowest levels since early February, with front-month Nymex crude (CL1:COM) for July delivery holding steady. +1.1% to $74.07 per barrel, while August Brent crude (CO1:COM) also ended +1.1% To $78.41 per barrel.

Meanwhile, US natural gas futures (NG1:COM) continued their choppy ride, with the July 1 Nymex contract closing. +6.6% To $2.757/million Btu.

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The US Energy Information Administration announced an increase of 1.2 million barrels in crude inventories last week, versus expectations of a decrease of 1.6 million barrels last week. Wall Street Journal Gasoline and distillate stocks rose, while refineries increased their production capacity to 95.4% from 94.3% the previous week.

“It's very surprising that crude oil is still holding up given the amount of construction, but crude oil prices have actually come down a little bit in the last few days, so this is Save a little word“.