Oil prices fall amid weak demand, interest rate fears
Date
5/13/2024 4:41:30 AM
(MENAFN) During early trading on Monday, oil prices experienced losses, primarily driven by indications of sluggish demand for fuel and statements from officials at the Federal Reserve that tempered hopes of interest rate reductions, potentially dampening economic growth and reducing fuel demand in the world's largest economy.
Brent crude futures dropped by 26 cents, or 0.3 percent, reaching USD82.53 per barrel by 0025 GMT, while West Texas Intermediate crude futures slipped by 23 cents, or 0.3 percent, to USD78.03 a barrel. This downward trajectory follows a decline of approximately one dollar in both crude oil benchmarks upon settlement on Friday. Central bank officials deliberated on whether US interest rates were sufficiently high to restore inflation to the targeted two percent level.
Analysts anticipate that the US Federal Reserve will maintain interest rates at their current levels for an extended period, thereby bolstering the value of the dollar. A stronger dollar subsequently increases the cost of oil, which is denominated in US currency, for investors holding alternative currencies.
According to analysts from ANZ, oil prices experienced a decline due to indications of weakening demand, exemplified by the increase in US fuel and distillate stocks in the week preceding the onset of the heightened travel season in the United States. Despite these bearish factors, market sentiment remains buoyed by expectations that the OPEC+ alliance will persist with oil production cuts throughout the latter half of the year.
As oil markets navigate a complex landscape influenced by demand dynamics, monetary policy considerations, and geopolitical developments, investors remain vigilant for further signals that could impact price movements in the coming sessions.
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