May 3 2024: Oil prices saw a slight increase on Friday due to the possibility of OPEC+ maintaining output cuts. However, the week marked the sharpest decline in oil benchmarks in three months, driven by uncertainties in demand and easing tensions in the Middle East.
Brent crude futures for July rose by 14 cents to reach $83.82 per barrel by 0646 GMT. Similarly, U.S. West Texas Intermediate crude for June climbed by 16 cents or 0.2%, reaching $79.11 per barrel.
Despite these marginal gains on Friday, both benchmarks were on track to register weekly losses. Concerns lingered among investors regarding the potential impact of prolonged high interest rates, particularly in the U.S., which is the leading global oil consumer.
Analysts from ANZ Research highlighted the upcoming U.S. driving season and its potential impact on oil demand. They noted that high inflation might lead consumers to opt for shorter drives during the holiday period.
Market attention also turned to U.S. economic data and future crude supply indicators from the top global producer. The recent decision by the U.S. Federal Reserve to maintain interest rates, coupled with concerns about inflation, added to the market’s uncertainty.
Furthermore, geopolitical tensions in the Middle East, particularly the Israel-Hamas conflict, had previously supported oil prices due to supply risks. However, these tensions appeared to be easing as talks of a temporary ceasefire emerged.
Brent crude was set for a weekly decline of 6.3%, while WTI was heading towards a loss of 5.6% for the week.
Looking ahead, the focus shifts to the upcoming meeting of OPEC+ scheduled for June 1. There are indications that the group may extend oil output cuts if demand does not pick up. Additionally, the U.S. Bureau of Labor Statistics’ release of the monthly nonfarm payroll report and Baker Hughes’ weekly count of oil and gas rigs are events to watch for further insights into oil market dynamics.
