Oil Prices Down Amid Recession Concerns, Cease-fire Possibility In Middle East

ANKARA, (UrduPoint / Pakistan Point News - 9th Aug, 2024) Oil prices decreased on Friday, due to continuing effects of recession fears in the US, cease-fire attempts in the middle East, while positive demand outlook in the US, and growing rate cut signals from the US Federal Reserve (Fed) limited further price falls.

International benchmark Brent crude traded at $79.08 per barrel at 10.45 a.m. local time (0745 GMT), a decrease of 0.1% from the closing price of $79.16 per barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $76.13 per barrel at the same time, a 0.1% fall from the previous session that closed at $76.19 per barrel.

Last week's employment report in the US, the world's largest oil consumer, heightened recession concerns and further fueled demand worries in the oil markets.

Although the decline in unemployment benefit applications announced Thursday provided some relief about the labor market's condition, the introduction of weak company balance sheets to recession concerns has tempered market participants' appetite for demand.

Meanwhile, the prospect of a cease-fire in the Middle East, home to the majority of global oil reserves, eases supply concerns in the markets and exerts downward pressure on prices.

Egyptian, Qatari and US mediators urged Israel and Hamas on Thursday to conclude a cease-fire and hostage release deal with no further delays or excuses.

A trilateral joint statement published by the Qatari Amiri Diwan said “there is no further time to waste nor excuses from any party for further delay.”

“The time has come to conclude the cease-fire and hostages and detainees release deal and implement this agreement.”

On the other hand, strong demand outlook in the US, following data indicating a fall in crude oil stocks on Wednesday, limited the further price declines.

According to data released by the Energy Information Administration (EIA) late Wednesday, U.S. commercial crude oil inventories decreased by approximately 3.7 million barrels to 429.3 million barrels, compared to the market prediction of a decline of around 1.6 million barrels for the week ending August 2."

Moreover, the expectation that the Fed will cut interest rates in September, supports upward price movements as a rate cut would likely weaken the US Dollar against other currencies, positively impacting oil demand.

The US dollar index fell by 0.07% to 103,14 at 10.43 a.m. local time (0743 GMT), compared to the previous trading session.