By Adedapo Adesanya
Crude oil depreciated on Thursday as the market got wind of a possible ceasefire between Israel and Hamas and after a large refinery in the United State shutdown over power failure, sending the price of Brent downward by $1.85 or 2.5 per cent to $78.70 per barrel, as the US West Texas Intermediate (WTI) crude futures slumped by $2.03 or 2.7 per cent to $73.82 a barrel.
Tensions in the Middle East have recently boosted oil prices since attacks by Yemen-based Houthi forces on vessels in the Red Sea have persisted, driving up costs and disrupting global oil trading.
The Houthi group also said it would keep up attacks on the US and British warships in what it called acts of self-defense following the war between Israel and Hamas.
However, unsubstantianted report from Al Jazeera said that Israel and Hamas had agreed to a ceasefire proposal that could put an end to the geopolitical premium that has buoyed oil in recent months.
Al Jazeera deleted the comment on X, formerly known as Twitter, a short while later, with oil prices reclaiming at least some of the losses.
Also, British Petroleum (BP) Plc on Thursday said it was in the process of shutting down its 435,000 barrel-per-day refinery in Whiting, Indiana after a power outage.
The City of Whiting said the power outage prompted visible flaring as products were burned off, adding to the drop in prices.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) would decide in March whether or not to extend voluntary oil production cuts in place for the first quarter.
According to sources, this was reached after a ministerial panel meeting made no changes to the group’s output policy.
OPEC+ currently has 2.2 million barrels per day of voluntary oil production cuts, announced in November 2023.
Oil prices had climbed in earlier trading after the US Federal Reserve Chair, Mr Jerome Powell, on Wednesday said interest rates in the world’s largest oil producer had peaked and would move lower in coming months.
There are hopes in the market that as inflation continues to fall and the country sees a sustained economic growth, it would help oil demand in the long run.
Data from the US also lent support as worker productivity grew faster than expected in the fourth quarter, keeping unit labour costs contained and giving the US Federal Reserve another boost in the fight against inflation.
US manufacturing stabilized in January amid a rebound in new orders, but inflation at the factories picked up.
