Oil stable as investors digest rate cut signals

[March 08, 2024]  By Robert Harvey
 
LONDON (Reuters) -Oil prices were little changed on the day on Friday, as investors digested hints of looming interest rate cuts in the United States and Europe.   

Brent crude futures were up 0.24%, or 20 cents, at $83.16 a barrel by 1018 GMT. U.S. West Texas Intermediate crude futures rose 0.28%, or 22 cents, to $79.15.

Oil rig pumpjacks, also known as thirsty birds, extract crude from the Wilmington Field oil deposits area near Long Beach, California July 30, 2013. REUTERS/David McNew/File Photo/

WTI had traded over $1 higher than the previous settlement at its intra-day peak earlier in the session.

Oil markets honed in on signals of possible rate cut timings from the United States and European Union on Thursday and Friday.

"It looks as if the path of global investors will remain inextricably linked to the language deployed by central bankers in their times of centre stage," PVM analyst John Evans said.

Lower interest rates could increase oil demand by boosting economic growth.

The European Central Bank (ECB) will likely start lowering interest rates some time between April and June, French central bank head and ECB policymaker Francois Villeroy de Galhau said on Friday.

His comments came after ECB chief Christine Lagarde said "We are just beginning to discuss the dialing back of our restrictive stance", at a press conference on Thursday, hinting at a June rate cut.

Similarly in the United States, Federal Reserve Chair Jerome Powell said on Thursday that the central bank was "not far" from gaining enough confidence that inflation is falling sufficiently to begin cutting interest rates.

But potentially adding a ceiling to oil price gains, the International Energy Agency's (IEA) oil markets and industry division head told Reuters the agency sees a relatively well-supplied market in 2024 with demand growth slowing.

"Depending on the pace of oil demand growth going forward, the strength of summer demand, any unexpected outages, we see that the market (is) relatively well supplied this year," Toril Bosoni said on Thursday.

(Reporting by Robert Harvey in London, Katya Golubkova in Tokyo and Emily Chow in Singapore; Editing by Emelia Sithole-Matarise)

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