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Oil rates slip
(MENAFN) In a volatile trading session on Monday, oil futures experienced extended losses as concerns over a potential recession in the United States outweighed fears stemming from geopolitical tensions in the Middle East, a pivotal region for global oil production.
Brent crude, the international benchmark, declined by USD1.04, equivalent to 1.4 percent, reaching USD75.77 per barrel by 0605 GMT. Similarly, United States West Texas Intermediate (WTI) crude fell by USD1.09, or 1.5 percent, settling at USD72.43 per barrel. This downturn marked a continuation of losses from Friday, where both Brent and WTI saw declines exceeding 3 percent, culminating in their fourth consecutive week of losses, the longest losing streak since November.
Investors reacted strongly to signs of a potential economic slowdown in the United States, the world's largest oil consumer, prompting a broad sell-off in global equity markets and a flight from risk assets. The apprehension was fueled by expectations that rapid rate cuts by the Federal Reserve might be necessary to stimulate growth.
Despite geopolitical tensions in the Middle East, including ongoing conflicts in Gaza following unsuccessful negotiations in Cairo, these factors were overshadowed by market concerns about weakening oil demand. Notably, slumping diesel consumption in China, a key driver of global oil demand growth, contributed to the downward pressure on prices.
Furthermore, the decision by OPEC+ to proceed with plans to gradually increase oil production from October also weighed on market sentiment. Analysts anticipate that this move will lead to higher supplies later in the year, further dampening oil prices in the face of subdued demand indicators.
While geopolitical risks traditionally support oil prices due to supply disruption fears, the current market sentiment reflects a prioritization of economic indicators and demand outlooks over regional tensions. Investors are expected to closely monitor economic data and central bank actions for cues on future market movements amidst the complex interplay of global economic uncertainties and geopolitical dynamics.
Brent crude, the international benchmark, declined by USD1.04, equivalent to 1.4 percent, reaching USD75.77 per barrel by 0605 GMT. Similarly, United States West Texas Intermediate (WTI) crude fell by USD1.09, or 1.5 percent, settling at USD72.43 per barrel. This downturn marked a continuation of losses from Friday, where both Brent and WTI saw declines exceeding 3 percent, culminating in their fourth consecutive week of losses, the longest losing streak since November.
Investors reacted strongly to signs of a potential economic slowdown in the United States, the world's largest oil consumer, prompting a broad sell-off in global equity markets and a flight from risk assets. The apprehension was fueled by expectations that rapid rate cuts by the Federal Reserve might be necessary to stimulate growth.
Despite geopolitical tensions in the Middle East, including ongoing conflicts in Gaza following unsuccessful negotiations in Cairo, these factors were overshadowed by market concerns about weakening oil demand. Notably, slumping diesel consumption in China, a key driver of global oil demand growth, contributed to the downward pressure on prices.
Furthermore, the decision by OPEC+ to proceed with plans to gradually increase oil production from October also weighed on market sentiment. Analysts anticipate that this move will lead to higher supplies later in the year, further dampening oil prices in the face of subdued demand indicators.
While geopolitical risks traditionally support oil prices due to supply disruption fears, the current market sentiment reflects a prioritization of economic indicators and demand outlooks over regional tensions. Investors are expected to closely monitor economic data and central bank actions for cues on future market movements amidst the complex interplay of global economic uncertainties and geopolitical dynamics.
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