By Adedapo Adesanya
Oil prices settled slightly lower on Thursday, pressured by weaker US demand data and reports of a United Nations draft resolution calling for a ceasefire in Gaza.
At the market yesterday, the price of the Brent crude futures fell by 17 cents or 0.2 per cent to $85.78 a barrel, while the US West Texas Intermediate (WTI) crude futures lost 20 cents or 0.3 per cent to trade at $81.07 a barrel.
Crude inventories in the US, the world’s biggest oil consumer, declined last week, the US Energy Information Administration (EIA) reported on Wednesday, and even though petrol (called gasoline) inventories fell for a seventh week, down 3.3 million barrels to 230.8 million, gasoline product supplied, an indicator for product demand, slipped below 9 million barrels.
According to market analysts, the fall suggested that gasoline markets, which had underpinned a recent market rally, may have been overbought.
Prices were also pressured by confirmation that the US drafted a UN resolution calling for a ceasefire that would allow the release of 40 Israeli hostages in return for hundreds of Palestinians detained in Israeli jails.
The Secretary of State for the US, Mr Antony Blinken, said on Thursday that he believed talks in Qatar could still reach a Gaza ceasefire.
Investors also took heart from the US central bank, which held interest rates in a range of 5.25 per cent to 5.5 per cent on Wednesday but kept an outlook for three rate cuts this year.
Lower rates could boost economic growth, which is good news for oil sales.
Meanwhile, data from the US showed that the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting that job growth remained strong in March. This could be an indicator of good demand in the future.
Also, the market continues to weigh Ukrainian attacks on Russian refineries, which has prompted investors to trade crude at higher prices, factoring in that the strikes could hit global petroleum supplies.
Ukrainian drones have targeted at least seven Russian refineries this month; according to reports, the attacks have shut down 7 per cent, or around 370,500 barrels per day, of Russian refining capacity.
Analysts say prolonged disruptions could force Russian producers to reduce supply if they are unable to export crude oil and face storage constraints.
Elsewhere, Germany’s economy was likely in recession in the first quarter of 2024 as weak consumption and anaemic industrial demand continued to push the recovery further into the future.
Also on Thursday, the Bank of England’s governor said Britain’s economy is moving in the right direction for the central bank to start cutting interest rates.
