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Relative calm in Oil movements while falling US demand increases uncertainty in the Middle East

By Mohamed Nabawy
25 Apr,2024
Relative calm in Oil movements while falling US demand increases uncertainty in the Middle East

Crude oil stabilized on Thursday following a decline in the previous session, as concerns about dwindling fuel demand in the United States, the largest consumer of oil globally, clashed with escalating conflict risks in the Middle East.

- Brent crude futures edged up by 29 cents, equivalent to 0.3%, reaching $88.31 per barrel, while U.S. West Texas Intermediate crude futures saw an increase of 25 cents, or 0.3%, reaching $83.06.

- The latest supply report from the U.S. Energy Information Administration (EIA) released on Wednesday revealed that gasoline stockpiles fell below expectations, while distillate stockpiles, contrary to forecasts, showed an increase. This indicates a potential slowdown in demand.

-The condition of domestic demand in the United States does not seem robust. The release of economic data later in the day will significantly impact market sentiment. Today's oil prices are influenced by factors beyond the control of the oil market.

- Unexpectedly, U.S. crude inventories experienced a significant decrease last week, as per the EIA report, attributed to a surge in exports.

- Concerns regarding U.S. fuel demand have emerged alongside indications of a slowdown in U.S. business activity for April. Additionally, stronger-than-expected inflation and employment data suggest that the Federal Reserve may postpone anticipated interest rate adjustments.

- Later on Thursday, U.S. economic data, including first-quarter GDP growth, will be released. Economists surveyed by Reuters predict a likely increase in Gross Domestic Product (GDP) at a 2.4% annualized rate.

- The recent decline in benchmark prices, following a brief rise above $90, reflects a renewed market focus on global economic challenges amid geopolitical tensions.

- Expectations suggest that conflicts in the Middle East could escalate, potentially leading to wider warfare that might disrupt oil supplies.

- Despite concerns, the oil supply remains unaffected thus far, and there have been no recent signs of direct conflict in the Middle East.

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