Adedapo Adesanya
By Adedapo Adesanya
The crude oil market closed mixed on Friday as investors weighed weak fuel demand in the United States and took profit as the year’s first half wrapped up.
The price of Brent crude futures increased by 2 cents to trade at $86.41 a barrel, while the US West Texas Intermediate (WTI) crude futures lost 20 cents or 0.24 per cent to sell for $81.54 per barrel.
For the week, Brent rose 0.02 per cent while WTI futures posted a 0.2 per cent loss and yet, both benchmarks gained around 6 per cent for the month.
The Energy Information Administration’s Petroleum Supply Monthly report, which was published on Friday, indicates that demand for petrol (gasoline) decreased to 8.83 million barrels per day, the lowest level since February, although US oil production and demand reached a four-month high in April.
Analysts said some traders took profits at the end of the second quarter after prices rallied earlier this month.
The US personal consumption expenditures (PCE) price index, the US Federal Reserve’s preferred inflation gauge, was flat in May, lifting hopes for rate cuts in September.
The markets have experienced a risk rally as a result of the increasing likelihood of a Fed easing cycle.
The CME FedWatch tool indicates that traders are currently estimating a 64 per cent likelihood of the first-rate reduction in September, an increase from 50 per cent a month ago.
The reduction of interest rates could be advantageous for the energy industry, as it could potentially boost consumer demand.
Investment bank, Barclays, expects Brent crude to remain around $90 a barrel over the coming months.
According to a Reuters poll conducted on Friday, the second half of 2024 may not see significant fluctuations in oil prices, as the prospect of increased supply from key producers and concerns regarding Chinese demand may mitigate geopolitical risks.
In 2024, Brent crude is anticipated to average $83.93 per barrel, while U.S. crude is expected to average $79.72, according to the poll.
Energy services firm Baker Hughes reported that the US active oil rig count, which serves as an early indicator of future output, decreased by six to 479 this week, the lowest level since December 2021.
