Oil closed lower on Thursday, under pressure amid revisions in expectations for US interest rates and rising US gasoline inventories. The session was characterized by volatility, as investors monitor developments in conflicts in the Middle East.
On the New York Mercantile Exchange (NYMEX), February 2024 WTI crude oil fell 0.70% (-$0.51), to $72.19 per barrel, while March Brent crude, traded on the Intercontinental Exchange (ICE), fell 0.84 % (-0.66 USD to 77.59 USD per barrel.
Oil came under pressure from strong US employment and services sector data, which injected caution into markets by making investors less optimistic about deep interest rate cuts by the Federal Reserve Bank (Fed, the US central bank).
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The commodity accelerated its decline after the US government released weekly inventory numbers, which revealed a larger-than-expected decline in oil inventories, but an increase of 10.9 million barrels in gasoline inventories.
Meanwhile, oil has received support from the ongoing conflicts in the Middle East, with recent explosions in Libya and Iran, Houthi attacks in the Red Sea, and Hezbollah threats.
Capital Economics believes that energy prices will fall in 2024. However, the consulting firm believes that the significant downward movements are already behind us. Capital commented in its report: “Supply was not directly affected, but the conflict between Israel and Hamas, along with tensions in the Red Sea, led to increased volatility in energy markets.” “We expect oil prices to decline this year as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) increase production, especially in the second half of the year.”
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