By 0419 GMT, U.S. West Texas Intermediate (WTI) oil futures lost 35 cents, or 0.5%, to $76.14 a barrel, while Brent crude futures down 35 cents, or 0.4%, to $81.27 a barrel. This decrease was due to the strengthening of the U.S. dollar (.DXY). For holders of foreign currencies, oil becomes more costly due to a rising dollar.
The decrease added to losses from the previous week, when WTI dropped over 3% and Brent dropped over 2% as a result of reports that an increase in inflation would cause the U.S. to postpone interest rate reduction by two months.
According to independent analyst Tina Teng of Auckland, “the risk-on sentiment seems to be in retreat after the Nvidia-led market rally last week as higher-for-longer rate expectations lifted the U.S. dollar, pressuring commodity prices.”
Since November, OPEC+ production cutbacks have been countered by growing U.S. output and worries about poor demand in China, resulting in oil prices hovering around $70 to $90 per barrel amid ongoing hostilities.
“The lack of new drivers contributed to the decline in crude oil prices,” ANZ analysts noted in a report. “Oil has been caught between bearish worries about weak demand in China and bullish factors like lower OPEC output and elevated geopolitical risks.”
According to a report from Goldman Sachs analysts, the geopolitical risk premium from the Yemeni Houthis’ attacks on ships in the Red Sea remained small, barely increasing Brent’s price by $2 per barrel.
However, due to larger-than-expected withdrawals in stockpiles held by Organization for Economic Co-operation and Development (OECD) member nations, the bank has increased its summer peak price for a barrel from $85, to $87.
While it has raised its estimate for the United States and India and decreased its estimate for China, Goldman Sachs still projects a 1.5 million barrels per day (bpd) increase in oil consumption in 2024.
The analysts went on, “Strong non-OPEC supply growth is likely to nearly keep pace with solid global demand growth.”
Read more: A neutral point of view on Pakistan current political turmoil
The White House national security advisor, Jake Sullivan, said CNN on Sunday that hostage negotiators from the United States, Egypt, Qatar, and Israel had reached a fundamental agreement during meetings in Paris, but that more conversations are ongoing while the Israel-Hamas conflict rages in the Middle East. Benjamin Netanyahu, the prime minister of Israel, stated that it was still unclear if an agreement would be reached.
Qatar plans to increase its production of liquefied natural gas, contributing to the world’s energy supplies, even if prices have just dropped sharply. As refineries return from maintenance, ANZ analysts said that oil stocks in the US might begin to decline in the upcoming weeks, which could provide some support for prices.