Oil prices extended losses on Friday, May 3, 2024 and stayed on course for the steepest weekly loss in three months, as investors weighed lower-than-expected US jobs data and the timing of interest rate cuts by the US Federal Reserve.
Brent crude futures for July were last down 29 cents, or 0.35 per cent, to $83.38 a barrel. US West Texas Intermediate crude for June fell 37 cents, or 0.47 per cent, to $78.58 per barrel. Both benchmarks are set for weekly losses as investors are concerned that higher-for-longer interest rates will curb economic growth in US-the world’s leading oil consumer, and in other parts of the world.
Benchmark Brent crude was on course for a weekly decline of about 6.8 per cent while WTI was headed for a loss of 6.4 per cent on the week, according to news agency Reuters. Coming to domestic prices, crude oil futures declined 0.76 per cent to ₹6,551 per barrel on the multi commodity exchange (MCX).
Oil down 6% this week: What’s cooling down the commodity?
-US job growth slowed more than expected in April and the annual wage gain cooled, data showed on Friday, prompting traders to raise bets that the US central bank will deliver its first interest rate cut this year in September.
-Analysts said that the economy is slowing a little bit. But the data gives a path forward for the Fed to have at least one rate cut this year. The US Federal Reserve held rates steady this week and flagged high inflation readings that could delay rate cuts. Higher rates typically weigh on the economy and can reduce oil demand.
-The market is repricing the expected timing of possible rate cuts after the release of softer-than-expected monthly jobs data Energy services firm Baker Hughes on Friday is due to release its weekly count of oil and gas rigs, an indicator of future crude output from the world’s top producer.
-Geopolitical risk premiums due to the Israel-Hamas war have faded as the two sides consider a temporary ceasefire and hold talks with international mediators. Oil prices touched $90 per barrel in April over Middle East crisis.
-The next meeting of OPEC oil producers – members of the Organization of the Petroleum Exporting Countries and allies including Russia – is set for June 1. Three sources from the OPEC group told Reuters it could extend its voluntary oil output cuts beyond June if oil demand does not increase.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
