Crude Oil Prices Dip but Set for First Weekly Gain in Four Weeks

Mumbai, 14 Jun (Commoditiescontrol): Crude oil prices fell on Friday but were on track for their first weekly gain in four weeks as markets weighed the impact of sustained U.S. interest rates against strong crude and fuel demand forecasts.

Brent crude futures dropped 72 cents, or 0.87%, to $82.04 a barrel, while West Texas Intermediate (WTI) U.S. crude futures declined 79 cents, or 1%, to $77.84 a barrel, reversing small gains from the previous session.

This week saw volatile movements in oil prices. A midweek rally was driven by the Organization of Petroleum Exporting Countries' (OPEC) optimistic forecast for global oil demand growth in 2024 and Goldman Sachs' projection of robust U.S. fuel demand this summer. These factors helped recover some of the losses from the prior week, which were influenced by OPEC and its allies' (OPEC+) decision to gradually unwind output cuts post-September.

Further supporting the market, Russia committed to adhering to its output obligations under the OPEC+ pact, despite exceeding its quota in May. ANZ analysts noted that "stricter adherence to the current quotas should more than offset any potential increases from the group of eight under the gradual phase-out of their voluntary cuts. This should see the crude oil market remain well supported over the next 18 months."

However, prices declined after the U.S. Federal Reserve held interest rates steady and delayed potential rate cuts to as late as December. Comments from Fed officials sparked concerns about a possible economic slowdown, which could reduce fuel demand.

Market participants are also closely monitoring upcoming inventory reports from China, the world's second-largest oil consumer, due on Friday. These reports are expected to provide insights into the demand for energy and metals, with ANZ analysts suggesting they might reveal any weaknesses in demand.

Overall, despite Friday's dip, crude oil prices are set to achieve their first weekly gain in nearly a month, buoyed by strong demand forecasts and OPEC+ production strategies.

(By Commoditiescontrol Bureau: 09820130172)