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Oil prices headed for biggest weekly loss in 3 months

2024-05-03 13:05:50Kosova&Bota SHKRUAR NGA REDAKSIA VOX

Oil prices headed for biggest weekly loss in 3 months

Oil prices, despite posting a rally on Friday, are headed for their biggest weekly loss in three months as uncertainty around demand and high interest rates fueled a sell-off limited by the prospect that OPEC+ will continue to hold back production.

Brent crude futures for July were up 31 cents, or 0.4%, at $83.98 a barrel by 0755 GMT. U.S. West Texas Intermediate crude for June was up 26 cents, or 0.3%, at $79.21 a barrel.

Both benchmarks are set for weekly losses as investors worry that higher interest rates will curb economic growth in the US, the world's top oil consumer, as well as in other parts of the world.

Brent was headed for a weekly decline of 6.2%, and WTI for a loss of 5.6% on the week. For further guidance, the market awaits US economic data and indicators of future crude oil supply from the world's top producer. The US Federal Reserve kept interest rates steady this week and posted high inflation readings that could delay rate cuts.

Later on Friday, the US Bureau of Labor Statistics will release its monthly nonfarm payrolls report, a measure of the strength of the nation's labor market that the Fed takes into account when setting interest rates. Higher rates typically weigh on the economy and can reduce demand for oil.

Also on Friday, energy services firm Baker Hughes ( BKR.O ) opens a new tab, and will release its weekly oil and gas rig count, an indicator of future crude oil production.

The London-listed firm reported first-quarter profit of $7.7 billion on Thursday. Geopolitical risk premiums over the Israel-Hamas war, which has the potential to disrupt oil supplies, have also faded as Israel and Hamas consider a temporary ceasefire and hold talks with international mediators.

Further, 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. OPEC+ may extend voluntary oil production cuts of 2.2 million barrels per day beyond June if oil demand does not pick up.

JP Morgan, which expects OPEC+ to extend cuts beyond June, said a counter-seasonal rise in oil inventories last month would be a concern for the producer group.


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