May 03, 2024 (MarketLine via COMTEX) --
Crude oil prices fell considerably during the week due to concerns over rising US inflation and its likely impact on the countryaEUR(TM)s economic growth, and hence oil consumption. The country also witnessed a slowdown in non-farm job creation, which aggravated the concerns over the gasoline demand in the country. These factors prompted the US Federal Reserve to carry forward the existing monetary policy, thereby giving no tax relief to businesses in the country. Prices also came under pressure amid hopes of Israel-Hamas ceasefire deal that could potentially ease the risks associated with energy supplies from the Middle East region.
Some key factors that led to changes in crude oil prices this week are as follows:
Oil prices declined on Monday and Tuesday, weighed down by renewed signs of a potential ceasefire deal in the Israel-Hamas conflict. Over the past few days, the US and other mediators negotiated with both the parties in Egypt for the release of 33 Israeli hostages and prevention of a full-blown conflict in Rafah. Such a development could alleviate the concerns over crude supply disruption from the Middle East region. Israel put forward a proposal involving the release of Hamas prisoners and a brief halt to the conflict in exchange for the release of hostages from Gaza, which Hamas was yet to agree. Prices also came under pressure from concerns over a rise in the US inflation, thereby diminishing the possibility of a cut in the country’s interest rates. The US personal consumption expenditures (PCE) price index stood at 3.4% during Q1 2024, up from 1.8% in the last quarter of 2023. Moreover, the US also witnessed a fall in its consumer spending in this quarter, which led to worries over the country’s economic outlook.
- Oil prices fell further on Wednesday, weighed down by worries over faltering crude and gasoline demand in the US. This was evident from the 7.3-million-barrel build in the country’s commercial crude inventory for the week ending on April 26, 2024. The latest EIA report also indicated a drop in the refinery utilization rates in the US to 87.5%, down over 3% from last year. This was presumably due to sluggish gasoline demand, which was down 1.3% annually at 8.5 million barrels per day (bpd). Besides, prices were also weighed down in anticipation of a ceasefire deal in the Israel-Hamas conflict. Over the past few days, the US and other mediators negotiated with both the parties in Egypt for the release of 33 Israeli hostages and prevention of a full-blown conflict in Rafah.
- Oil prices rose slightly on Thursday, supported by signs of tight global crude oil inventories due to the adoption of voluntary output cuts from the OPEC+ group. In its monthly outlook, the US Energy Information Administration (EIA) projected that the global stockpiles would fall by 0.3 million barrels per day (bpd) during the first half of 2024. However, the upside to prices was somewhat restrained by concerns over high US interest rates for a longer-than-expected duration and its impact on economic growth. This was after the US Federal Reserve left the rates untouched during its fiscal review meet due to the current inflation levels in the country.
- Oil prices declined on Friday, weighed down by concerns over slowing employment generation in the US and its likely impact on the country’s energy consumption. As per the US Bureau of Labor Statistics, the country created 175,000 new non-farm jobs during April 2024, which was one of the lowest in the last two years. The unemployment rate in the US also rose slightly to 3.9% in the same month, indicating tight market conditions. Elsewhere, talks advanced between Israel and Hamas over a ceasefire deal in Cairo, Egypt. It somewhat eased the worries over crude supply instability from the Middle East region and thus pushed prices further down.
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COMTEX_452118094/2227/2024-05-09T09:42:36
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