Oil prices slipped more than $1 on Wednesday, April 17, as US commercial inventories rose, while weaker economic data from China and dampened prospects of interest rate cuts stoked worries about the global demand. Analysts do not expect Iran’s unprecedented missile and drone strike on Israel to prompt dramatic US sanctions on Iran’s oil exports, despite Janet Yellen’s remarks.
Brent futures for June were down $1.01, or 1.32, to $89.01 a barrel, while US crude futures for May were down 88 cents, or one per cent, at $84.48 a barrel. Both were on track for their biggest fall since March 20, according to Reuters. Coming to domestic prices, crude oil futures were last down 2.27 per cent lower at ₹6,973 per barrel on the multi commodity exchange (MCX).
Why are crude oil prices dropping?
-Oil prices have softened this week as economic headwinds curb gains from geopolitical tensions, with markets eyeing how Israel might respond to Iran’s weekend attack. Analysts said that oil prices go about their business of unwinding some of the war premium that has been priced in and also faced “a setback in interest rate cut hopes.”
-Crude inventories rose by 2.7 million barrels to 460 million barrels in the week ending April 12, the US Energy Information Administration (EIA) said, nearly double analysts’ expectations in a Reuters poll for a 1.4 million-barrel build.
-Top Federal Reserve officials including Chair Jerome Powell backed away from providing any guidance on when interest rates may be cut, diminishing investors’ hopes for meaningful reductions in borrowing costs this year.
-In China, the world’s biggest oil importer, the economy grew faster than expected in the first quarter of 2024 at 5.3 per cent, but several other economic indicators showed that demand remains weak.
-The drop in oil prices came even as UK inflation data released today paved way for the Bank of England (BoE) to start interest rate cuts in 2024 after inflation dropped to its lowest level in two and a half years in March.
Also Read: UK vs US: Which superpower will first cut interest rates in 2024? Here’s what inflation indicates
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Published: 17 Apr 2024, 09:37 PM IST