New Delhi

Oil prices climbed for the third day on signs of stronger demand and hopes that the Federal Reserve will soon take its foot off the gas. 

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Brent crude ticked closer to $86 per barrel, while West Texas Intermediate eclipsed $83.

Fresh data showed an increase in US gasoline and jet fuel consumption as the summer travel season gets underway. Additionally, nationwide crude stockpiles continued to dwindle, while Brent's prompt spread emphasised tighter near-term conditions.

Slumping to its weakest since 2021, US inflation slowed sharply in June, fanning expectations that the Federal Reserve might cut borrowing costs this quarter. Concerning this development in price action, the sudden weakening of the US dollar happened amid a renewed appeal for commodities among overseas buyers.

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Oil prices have risen this year as OPEC+ has restrained output to drain a glut in the market, offsetting increases from nations outside the group. The cartel anticipates that worldwide oil demand will gain more than 2 million barrels per day this year. However, the International Energy Agency injected a note of caution as it forecasted a slowing down of China's economic growth.

The underlying metrics portray strength despite lacklustre recent headline price movements. Brent's prompt spread- the gap between the two nearest contracts broke above $1 a barrel in backwardation this week, over twice the difference a month ago.

The performance of oil recently reflects some of the complexities that are at play in markets. In a market poised by improving indicators of demand and a looming potential pivot by the Federal Reserve, the oil market is caught between supply constraints and economic shifts.