Oil ends lower, posts weekly decline as US rate cut hopes dim
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[February 24, 2024] By
Nicole Jao
NEW YORK (Reuters) -Oil prices fell nearly 3% lower on Friday and posted
a weekly decline after a U.S. central bank policymaker indicated
interest rate cuts could be delayed by at least two more months.
Brent crude futures settled down $2.05, or 2.5%, at $81.62 a barrel,
while U.S. West Texas Intermediate crude futures (WTI) were down $2.12,
or 2.7%, to $76.49.
For the week, Brent declined about 2% and WTI fell more than 3%.
However, indications of healthy fuel demand and supply concerns could
revive prices in the coming days.
Federal Reserve policymakers should delay U.S. interest rate cuts by at
least another couple of months, Fed Governor Christopher Waller said on
Thursday, which could slow economic growth and curb oil demand.
The Fed has held its policy rate steady in a 5.25% to 5.5% range since
last July. Minutes of its meeting last month show most central bankers
were worried about moving too quickly to ease policy.
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"The entire energy complex is reacting, because if inflation begins to
come back it will slow demand for energy products," said Tim Snyder,
economist at Matador Economics.
"That is not something the market wants to digest right now, especially
as it is trying to figure out a direction," he added.
Some analysts, however, say demand has remained largely healthy despite
the impact of high interest rates, including in the United States.
JPMorgan's demand indicators are showing oil demand rising by 1.7
million barrels per day (bpd) month over month through Feb. 21, its
analysts said in a note.
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"This compares to a 1.6 million bpd increase observed during the
prior week, likely benefiting from increased travel demand in China
and Europe," the analysts said.
Meanwhile, Gaza truce talks were underway in Paris in what appears
to be the most serious push in weeks to halt the conflict in
Palestine and see Israeli and foreign hostages released.
Ceasefire talks could prompt the market to anticipate an easing of
geopolitical tensions, Tim Evans, an independent oil market analyst,
said in a note.
Still, tensions in the Red Sea continued, with attacks by
Iran-backed Houthi militants near Yemen on Thursday forcing more
shipping vessels to divert from the trade route.
U.S. energy firms this week added the most oil rigs since November,
and the most in a month since October 2022, energy services firm
Baker Hughes said.
The oil rig count, an early indicator of future output, rose by six
to 503 this week, and increased by four this month.
(Additional reporting by Noah Browning, Natalie Grover and Sudarshan
Varadhan; Editing by Marguerita Choy and Jan Harvey)
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