(Bloomberg) -- Oil extended gains alongside risk assets after Federal Reserve Chair Jerome Powell said the time has come to cut interest rates, but the commodity still declined for the week amid a soft economic outlook in major economies.
West Texas Intermediate advanced 2.5% to settle above $74 a barrel. Stock markets also rallied close to all-time highs as Powell’s comments cemented expectations for a rate cut at the central bank’s next gathering in September. Crude traders largely expect lower interest rates to spur economic growth and increase crude demand.
Still, oil’s weekly loss comes as OPEC+ supply curbs have been overshadowed by a poor economic outlook in major economies, with both China and the US showing signs of weakness. Data this week showed US manufacturing contracting at the fastest pace this year, as well as softness in the labor market. In Europe, meanwhile, futures for diesel — a workhorse industrial fuel — have retreated to the lowest level in 14 months.
In the Middle East, meanwhile, Israeli negotiators arrived in Cairo for talks aimed at cementing an agreement to pause the war between Israel and Hamas, a step that could reduce tensions in the crude-producing region.
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