Oil Prices Slip as IEA Predicts Slowing Demand
Oil Demand Outlook Weighs on Prices
Oil prices slipped on Friday due to a forecast of slowing demand by the International Energy Agency (IEA), which offset support from geopolitical tensions and hopes of a potential U.S. Federal Reserve interest rate cut. The IEA’s announcement came as a blow to market sentiment, suggesting a loss of momentum in global oil demand growth and trimming its 2024 growth forecast, in contrast to OPEC’s view.
Market Response and Price Movement
Following the IEA’s announcement, there was a tentative attempt to recover, but hopes were shattered as oil futures were down 53 cents, or 0.6%, at $82.33 a barrel at 0915 GMT. U.S. West Texas Intermediate crude futures also fell 33 cents to $77.70. The previous day, both contracts had climbed over 1% as a larger-than-expected drop in U.S. retail sales prompted hopes for potential Federal Reserve interest rate cuts, which could be positive for oil demand.
Factors Affecting Prices
Hopes for U.S. rate cuts provided support on Thursday, but investors are adjusting their positions ahead of a long weekend in the U.S. Tension in the Middle East also continued to provide support, with analysts suggesting the risk of a wider Middle East conflict could guide crude prices. Israeli forces’ raid on the biggest functioning hospital in Gaza and Hezbollah’s firing of dozens of rockets at a northern Israeli town added to the geopolitical tensions.
Expert Analysis
Experts in the oil market have weighed in on the situation, with Tamas Varga of oil broker PVM acknowledging the impact of the IEA’s updated supply-demand outlook. Vandana Hari, founder of oil markets analysis provider Vanda Insights, expressed expectations for the latest gains from an increased Mideast risk premium to stick, especially going into the weekend.
Oil prices continue to be influenced by a complex interplay of factors, including demand forecasts, geopolitical tensions, and market speculation, creating a dynamic and unpredictable trading environment.
