Oil set for steepest weekly losses in three months
Demand uncertainty and easing tension in the Middle East have reduced supply risks, putting the crude benchmarks under pressure
03 May 2024 - 08:04
bySudarshan Varadhan
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A Sinopec oil tanker approaches cargo vessel Dongtai Baoze, left, berthed at an anchorage off Zhoushan port to supply it with bunker fuel, in Zhejiang province, China. Picture: REUTERS/STRINGER
Singapore — Oil prices edged up on Friday on the prospect of Opec+ continuing output cuts, but the crude benchmarks were headed for the steepest weekly losses in three months on demand uncertainty and easing tension in the Middle East reducing supply risks.
Brent crude futures for July rose 24c to $83.91 a barrel by 5.14am GMT. US West Texas Intermediate (WTI) crude for June was up 19c, or 0.3%, to $79.19 a barrel.
Still, both benchmarks were on track for weekly losses as investors worried about the prospect of higher-for-longer interest rates curbing growth in the US, the top global oil consumer, and in other parts of the world.
“With the US driving season almost upon us, high inflation may see consumers opt for shorter drives over the holiday period,” analysts at ANZ Research said in a note on Friday.
The market is now looking towards US economic data and indicators of future crude supply from the world’s top producer.
The US Federal Reserve held interest rates steady this week, and flagged recent disappointingly high inflation readings that could make rate cuts take awhile in coming.
Geopolitical risk premiums due to the Israel-Hamas war, which had kept prices high due to global supply risks, are also fading, with Israel and Hamas considering a temporary ceasefire and holding talks with international mediators.
Brent headed for a 6.3% weekly decline, while WTI moved towards a loss of 5.6% on the week.
The drop comes just weeks ahead of the next meeting of oil cartel Opec and allies led by Russia, together called Opec+.
Three sources from Opec+ producers said the group could extend its voluntary oil output cuts of 2.2-million barrels a day beyond June if oil demand fails to pick up, but the group has yet to begin formal talks ahead of the June 1 meeting.
Later on Friday, the US bureau of labour statistics will release its monthly nonfarm payroll report, which is a measure of the strength of the country’s job market and is considered by the Fed when setting interest rates. Higher rates typically weigh on the economy and that can reduce oil demand.
Also on Friday, energy services firm Baker Hughes is due to release its weekly count of oil and gas rigs, an indicator of future crude output
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil set for steepest weekly losses in three months
Demand uncertainty and easing tension in the Middle East have reduced supply risks, putting the crude benchmarks under pressure
Singapore — Oil prices edged up on Friday on the prospect of Opec+ continuing output cuts, but the crude benchmarks were headed for the steepest weekly losses in three months on demand uncertainty and easing tension in the Middle East reducing supply risks.
Brent crude futures for July rose 24c to $83.91 a barrel by 5.14am GMT. US West Texas Intermediate (WTI) crude for June was up 19c, or 0.3%, to $79.19 a barrel.
Still, both benchmarks were on track for weekly losses as investors worried about the prospect of higher-for-longer interest rates curbing growth in the US, the top global oil consumer, and in other parts of the world.
“With the US driving season almost upon us, high inflation may see consumers opt for shorter drives over the holiday period,” analysts at ANZ Research said in a note on Friday.
The market is now looking towards US economic data and indicators of future crude supply from the world’s top producer.
The US Federal Reserve held interest rates steady this week, and flagged recent disappointingly high inflation readings that could make rate cuts take awhile in coming.
Geopolitical risk premiums due to the Israel-Hamas war, which had kept prices high due to global supply risks, are also fading, with Israel and Hamas considering a temporary ceasefire and holding talks with international mediators.
Brent headed for a 6.3% weekly decline, while WTI moved towards a loss of 5.6% on the week.
The drop comes just weeks ahead of the next meeting of oil cartel Opec and allies led by Russia, together called Opec+.
Three sources from Opec+ producers said the group could extend its voluntary oil output cuts of 2.2-million barrels a day beyond June if oil demand fails to pick up, but the group has yet to begin formal talks ahead of the June 1 meeting.
Later on Friday, the US bureau of labour statistics will release its monthly nonfarm payroll report, which is a measure of the strength of the country’s job market and is considered by the Fed when setting interest rates. Higher rates typically weigh on the economy and that can reduce oil demand.
Also on Friday, energy services firm Baker Hughes is due to release its weekly count of oil and gas rigs, an indicator of future crude output
Reuters
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