Oil Prices Settle Lower but Notch Second-Monthly Gain on Tighter Supply Hopes
Oil Prices Overview
Oil prices settled lower on Thursday but managed to secure a second consecutive monthly gain fueled by hopes of tighter supply and the prospect of a summer interest rate cut in the U.S. following lower inflation data.
Market Performance
By 14:30 ET (19.30 GMT), futures for oil fell 0.4% to $78.26 a barrel, while the contract dropped 0.3% to $81.88 a barrel, wrapping up the month of February with a positive trend.
Inflation Data Insights
The latest data revealed a 0.3% rise in inflation on a monthly basis and a 2.8% increase annually in January, easing concerns about accelerated inflation. The core PCE price index, a key metric for inflation, showed a 0.4% monthly increase in January with an annual rise of 2.8%.
Market Sentiment and Expectations
Anticipation of an extension of production cuts by OPEC and its allies, known as OPEC+, into the second quarter buoyed market sentiment. OPEC+ is likely to maintain current production curbs until the end of 2024, with a meeting scheduled for early March to make a decision.
- U.S. oil production slightly decreased from record highs in December, providing additional support for tighter market hopes.
- A major state-owned Chinese producer’s warning about stagnant oil demand in the country raised concerns about a potential demand slowdown.
- The ongoing Middle East conflict between Israel and Hamas added geopolitical uncertainty to the oil market.
Conclusion
Despite various market factors influencing oil prices, the industry remains dynamic and responsive to global events, making it a sector to watch closely in the coming months.
