Oil prices took a hit on Friday due to a weaker demand outlook by the International Energy Agency (IEA), counteracting hopes of an interest rate cut by the U.S. Federal Reserve. The IEA announced on Thursday that global oil demand growth was slowing down and adjusted its 2024 growth forecast, contrasting with the view held by the Organization of the Petroleum Exporting Countries (OPEC). Tamas Varga of oil broker PVM described the impact of this news, stating, “There was a tentative attempt to recover yesterday morning, but hopes were shattered after the IEA published its updated supply-demand outlook.”
As a result, Brent crude futures dropped by 0.6 percent to $82.33 a barrel, while U.S. West Texas Intermediate crude futures fell to $77.70. However, on Thursday, both contracts experienced a 1 percent increase due to a larger-than-expected drop in U.S. retail sales, which raised hopes of an interest rate cut by the Federal Reserve. Such a cut could potentially boost oil demand. Hiroyuki Kikukawa, president of NS Trading, mentioned that investors are adjusting their positions ahead of a long weekend in the U.S., which could explain the decrease in oil prices.
Despite the weaker demand outlook, geopolitical tensions in the Middle East continue to provide support for oil prices. Analysts believe that the risk of a wider conflict in the region could influence crude prices. In recent events, Israeli forces raided the largest functioning hospital in Gaza, and Hezbollah fired rockets at a northern Israeli town in response to the killing of 10 civilians in southern Lebanon. Vandana Hari, founder of oil markets analysis provider Vanda Insights, predicts that the increased risk premium in the Middle East will continue to impact oil prices, especially over the weekend.
The combination of the IEA’s demand forecast and geopolitical tensions has caused uncertainty in the oil market. While hopes for an interest rate cut by the Federal Reserve initially supported oil prices, the weaker demand outlook has dampened these expectations. As investors navigate these factors, the oil market remains on edge, waiting for further developments in both the global economy and geopolitical landscape.
 and the Organization of the Petroleum Exporting Countries (OPEC). It also mentions the potential influence of an interest rate cut by the U.S. Federal Reserve on oil demand. Additionally, the article highlights the geopolitical tensions in the Middle East and their effect on oil prices. Overall, the combination of these factors has created uncertainty in the oil market, leaving investors on edge for further developments.){kind=link}