Oil prices declined today, Thursday, following signals from the U.S. Federal Reserve indicating a potential initiation of rate cuts. Brent crude futures saw a 1.4 percent decline settling at $81.71 per barrel. Meanwhile, U.S. West Texas Intermediate crude futures witnessed a 0.01 percent decline settling at $75.84 per barrel by 7:48 GMT
Expectations of rate cuts
Oil prices witnessed a decline following the Federal Reserve’s remarks on interest rates. On Wednesday, Federal Reserve chairman, Jerome Powell, declared that interest rates had peaked and were expected to decrease in the coming months. This prediction is based on the anticipation of declining inflation, along with a sustained outlook for job and economic growth.
China’s property market
Simultaneously, China, the world’s second-largest economy, revealed new support measures for its struggling property market. This move came as a response to concerns arising from the liquidation of Evergrande and the sharp decline in new home prices at the end of 2023. Although oil prices saw a decline today, analysts suggest that the combination of lower interest rates and economic growth is favorable for oil demand.
In the Middle East, concerns over potential risks on shipping in the Red Sea are contributing to the volatility of oil prices and disruptions in global oil trading. The energy market remains on edge as the world awaits a U.S. response to recent tensions in Jordan. Meanwhile, the geopolitical climate in the Red Sea remains on edge.
Optimism about global oil demand
Despite geopolitical tensions, analysts expressed optimism about global oil demand. They anticipate China to remain the single largest contributor to global oil demand growth in 2024, projecting a growth of 530,000 barrels per day (bpd). Moreover, they believe that 2024 will be fundamentally a healthy year for the oil market.
As global economic indicators and geopolitical tensions continue to influence oil markets, industry players and investors closely watch for developments that could impact oil prices and supply dynamics in the coming months.
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