Oil rates decline over weak fuel demand in US, profit taking
(MENAFN) On Friday, oil prices experienced a decline as investors reacted to sluggish US fuel demand and adjusted their positions ahead of the quarter-end. brent crude futures for August settlement, which expired on the same day, saw a minimal increase of 2 cents to settle at USD86.41 per barrel, according to the Al-Attiyah Foundation's Weekly energy Market Review.
Meanwhile, US West Texas Intermediate (WTI) crude futures settled 20 cents lower at USD81.54 per barrel, marking a 0.24 percent decrease. Despite these daily fluctuations, both Brent and WTI futures posted gains for the week, with Brent rising 1.4 percent and WTI climbing 1.0 percent. For the entire month, both benchmarks recorded increases of around 6 percent.
The Energy Information Administration's Petroleum Supply Monthly report highlighted that while US oil production and overall demand reached a four-month high in April, gasoline demand dipped to 8.83 million barrels per day, its lowest since February.
Market focus also turned to US economic data, particularly the flat reading of the US personal consumption expenditures (PCE) price index in May. This development raised expectations among investors for potential interest rate cuts by the Federal Reserve later this year, particularly in September. However, the immediate market reaction to this inflation data remained subdued.
In the energy sector, Baker Hughes reported a decrease of six active oil rigs in the US this week, bringing the count to 479, the lowest since December 2021. This decline serves as an early indicator suggesting potentially lower future output.
Meanwhile, in the Asian spot market for liquefied natural gas (LNG), prices held steady throughout the week. Forecasts of hotter temperatures during the upcoming summer months in the northern hemisphere bolstered demand for electricity, which is crucial for cooling purposes. The average LNG price for August delivery into northeast Asia was estimated at USD12.50 per million British thermal units (mmBtu), slightly down from USD12.60 per mmBtu the previous week, according to industry sources.
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