(MENAFN) Oil rates saw a decline on Friday, marking their most significant weekly drop in three months, as investors weighed factors such as weak US jobs data and speculation about potential Federal Reserve interest rate adjustments. Brent crude futures for July settled 71 cents lower, or 0.85 percent, at USD82.96 per barrel, while US West Texas Intermediate crude for June fell by 84 cents, or 1 percent, to USD78.11 per barrel. This downward trend reflected broader market sentiments as traders assessed recent economic indicators and central bank policy decisions.
Investor concerns about the impact of sustained high borrowing costs on US economic growth were notable, especially considering the Federal Reserve's decision to maintain interest rates during the week. With the United States being a major oil consumer, any potential slowdown in economic activity could affect oil demand. Brent crude declined by over 7 percent, and WTI saw a similar decrease of 6.8 percent during the week, according to the Al-Attiyah Foundation's Weekly Energy Market Review.
Moreover, the release of US job data for April, showing slower-than-expected job growth and a cooling in annual wage gains, further fueled concerns among traders. There was speculation that the Federal Reserve might implement its first interest rate cut of the year in September, given the economic data. Despite maintaining rates during its recent meeting, the Fed acknowledged high inflation readings that could delay future rate cuts.
Additionally, geopolitical considerations, such as the Israel-Hamas conflict, influenced oil prices, with prospects of a temporary ceasefire and ongoing discussions mediated by international parties. Despite these developments, geopolitical risk premiums associated with the conflict diminished, contributing to the downward pressure on oil prices.
In the LNG market, the average LNG price for June delivery into northeast Asia rose modestly to USD10.40 per million British thermal units (mmBtu) from USD10.20/mmBtu in the previous week. In Europe, gas stocks remained relatively high at 62.6 percent capacity for this time of year.
In the United States, natural gas futures surged by approximately 5 percent on Friday and marked a record increase of 33 percent for the week. This increase was attributed to heightened demand from increased gas flow to LNG export plants and forecasts projecting warmer weather, prompting higher gas consumption for air conditioning.
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