Mar 8 2024: On Friday, oil prices experienced a dip as investors evaluated indications of potential interest rate cuts in the United States and Europe alongside expectations of robust global supply for the year.
Brent crude futures dropped by 0.54%, or 45 cents, to $82.51 a barrel by 1305 GMT. Similarly, U.S. West Texas Intermediate crude futures fell by 0.66%, or 52 cents, to $78.41, after initially trading more than $1 higher than Thursday’s settlement earlier in the session.
Both benchmarks are on track for weekly losses, with Brent facing a 1.29% decline from last Friday and WTI down by 1.95%. However, they have maintained a relatively narrow range over the past month, fluctuating between $81.50 and $84 for Brent, and $76 to $80 for WTI.
Investec’s Head of Commodities, Callum Macpherson, noted, “Oil markets have stayed relatively flat over the past couple of weeks despite strong rallies and some all-time highs across equities, gold, bitcoin, and bonds.”
The International Energy Agency (IEA) anticipates a well-supplied market in 2024, with demand growth slowing, potentially capping prices, according to Toril Bosoni, head of the IEA’s oil markets and industry division.
Market attention also focused on signals regarding the timing of potential rate cuts in the United States and the European Union.
PVM analyst John Evans remarked, “It looks as if the path of global investors will remain inextricably linked to the language deployed by central bankers in their times of center stage.”
Lower interest rates could stimulate oil demand by fostering economic expansion.
French central bank head and ECB policymaker Francois Villeroy de Galhau suggested that the European Central Bank (ECB) could initiate interest rate reductions between April and June.
Likewise, Federal Reserve Chair Jerome Powell indicated on Thursday that the central bank was nearing the point where it could begin cutting interest rates, contingent upon sufficient confidence in declining inflation.
The release of U.S. payrolls data is anticipated at 1330 GMT.