Oil Prices Surge After Falling Sharply For Seven Weeks

Oil Prices Surge

Oil prices surge

Oil prices surge heading for heavy losses this week as indications of strong U.S. output and stocks shattered hopes for tight crude markets in the upcoming months. They had slightly increased from near seven-week lows in Asian trade on Friday.

Prior to the announcement of significant U.S. nonfarm payrolls data later in the day, which is expected to influence the outlook for interest rates, the markets were also tense.

By 21:09 ET (01:09 GMT), West Texas Intermediate crude futures increased by 0.5% to $78.88 a barrel, while Brent oil futures ending in July saw a 0.5% increase to $84.06 a barrel. Following significant losses this week, both contracts were trading near their lowest points in seven weeks.

Oil will drop by more than 5% this week.

A barrage of unfavorable signals for the crude markets was expected to cause Brent and WTI futures to drop between 5% and 6% this week.

Data indicating higher output and an unanticipated increase in U.S. stockpiles revealed that the oil markets were not as tight as speculators had first hoped.

Alongside this, concerns over supply interruptions in the Middle East were lessened when Israel and Hamas carried out more talks regarding possible truce.

This week, worries about a weakening economy that would reduce demand also surfaced, particularly in light of the U.S. Federal Reserve’s warning that it will maintain higher interest rates for an extended period of time.

More information on interest rates should be revealed by nonfarm payrolls data, which is anticipated later on Friday.

Concerns about weak demand were also influenced by mediocre purchasing managers index data from China, the world’s largest petroleum importer. Following a robust start to the year, business activity in the nation was observed to be decreasing in April.

Nevertheless, a weaker dollar provided some solace for crude on Friday, as the US currency declined ahead of the nonfarm payrolls data.

OPEC+ might keep cutting production.
According to Reuters, if demand does not increase, the Organization of Petroleum Exporting Countries and their allies, or OPEC+, may continue to cut production by 2.2 million barrels per day after the deadline of June 30.

Members of the cartel have not yet started official negotiations on the issue, though. Nevertheless, the cartel’s prolonged output cuts may portend further constrained markets in 2024.

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