Oil Dips on Deflated US Interest Rate Cut Expectations, OPEC+ Decision
Date
6/10/2024 1:56:54 AM
(MENAFN- The Al-Attiyah Foundation) Oil prices edged down on Friday and posted a third straight weekly loss as investors weighed OPEC+ reassurances against the latest U.S. jobs data that lowered expectations that the Federal Reserve will cut interest rates soon. brent crude futures settled 25 cents lower at $79.62 a barrel, while U.S. West Texas Intermediate crude (WTI) fell 2 cents to $75.53. Data showed U.S. jobs growth accelerated far more than expected in May, keeping the Fed on track to hold off starting to cut interest rates until September at the earliest. The European Central Bank went ahead with its first interest rate cut since 2019 on Thursday, despite an increasingly uncertain inflation outlook. High borrowing costs can slow economic activity and dampen demand for oil. However, oil prices have been strengthened by support from OPEC+ members Saudi Arabia and Russia, indicating readiness to pause or reverse oil output increases. Still, crude fell for a third straight week on demand concerns, with Brent down 2.5% and WTI off 1.9%. Oil slipped earlier last week after analysts saw Sunday's OPEC+ meeting as an indication of rising supply, which is bearish for prices. In the U.S., active oil rig count fell by four this week to 492.
Asia Spot Prices Hold at 6-month High as Hot Weather Drives Demand
Asian spot liquefied natural gas (LNG) prices were steady this week, holding near a six-month peak on higher gas-for-power demand due to heat wave in India and East Asia and expected above-normal temperatures for China in mid-June. The average LNG price for July delivery into north-east Asia was at $12.00 per million British thermal units (mmBtu), unchanged from the previous week and close to its highest levels since mid-December, industry sources estimated. Asian markets were also supported initially by European gas supply concerns, but have largely retained their gains as additional interest has emerged from buyers, especially in Japan and South Korea, analysts said. More Atlantic LNG was shipped to Asia, and the open inter-basin arbitrage suggests a firm incentive for this to continue. In Europe, gas prices hit a six-month high on Monday last week, on concerns over Norwegian supply due to unplanned outage at Gassco-operated Nyhamna processing plant. However, for the week, the Dutch TTF contract was down 2,5% at $10.46 per mmBtu. This coincided with a rise in U.S. prices as high temperatures in the Southwest boost gas-for-power demand.
By: The Al-Attiyah Foundation.
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