Oil prices rose around one per cent in the previous session on geopolitical tensions in the Middle East but posted a weekly loss over a bearish world oil demand growth forecast from the International Energy Agency (IEA) and worries about delayed US interest rate cuts after hotter-than-expected inflation.
Brent crude futures settled up 71 cents at $90.45 per barrel, while US West Texas Intermediate (WTI) crude futures rose 64 cents to $85.66. For the week, Brent declined 0.8 per cent, while WTI dropped more than one per cent. Coming to domestic prices, crude oil futures settled 0.04 per cent higher at ₹7,190 after hitting an intra day high of ₹7,322 on the multi commodity exchange.
What’s driving crude oil prices?
-The IEA cut its forecast for 2024 world oil demand growth to 1.2 million barrels per day (bpd). The Organisation of Petroleum Exporting Countries (OPEC) said on Thursday that the world oil demand will rise by 2.25 million bpd in 2024. Analysts said that for now the market is mostly in the OPEC demand camp as opposed to the IEA’s reduced forecast.
-During the week, oil prices neared a six-month high on concern that Iran, the third-largest OPEC producer, might retaliate for a suspected Israeli warplane attack on Iran’s embassy in Damascus.
-Analysts noted that the market’s main focus is on whether Iran will retaliate against Israel, with the fear of supply disruption associated with the events in the Middle East supporting prices. The US expects an attack by Iran against Israel but one that would not be big enough to draw itself into war. Tehran has signaled a response aimed at avoiding major escalation.
-Supply chain issues still carry the biggest risk premium as Iran maintains its threat to shut the Suez Canal, said economist at Matador Economics. Friday’s gains erased the previous session’s losses, which were dominated by stubborn US inflation that dampened hopes for an interest rate cut as early as June.
-Higher interest rates can weaken economic growth and depress oil demand. US energy firms this week cut the number of oil rigs operating for a fourth week in a row, energy services firm Baker Hughes said in its closely followed report. The oil and gas rig count, an early indicator of future output, fell by three to 617 in the week to April 12, the lowest since November.
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Published: 13 Apr 2024, 06:35 PM IST