Oil prices decreased on Thursday due to markets failing to recover from previous days’ losses when recession fears sent global markets into a freefall, while data suggesting strong demand in the US, rising expectations that major Central Banks will reduce interest rates, and heightened geopolitical concerns in the Middle East, limited downward price movements.
International benchmark Brent crude traded at $78.16 per barrel at 10.06 a.m. local time (0845 GMT), a decrease of 0.2% from the closing price of $78.33 per barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at $75.16 per barrel at the same time, a 0.1% fall from the previous session that closed at $75.23 per barrel.
Both benchmarks fell on Thursday with the addition of weak corporate balance sheets to recession concerns.
Reminding that the data in the employment report released in the US last week increased the concern of recession, analysts noted that the weekly unemployment benefit applications data to be announced in the country later in the day might provide more evidence about the labor market in the US and could be decisive on the direction of the markets.
Demand fears fueled by the heightened recession concerns in the US, the world’s largest oil consumer, supported downward price movements.
On the other hand, data indicating a drop in crude stocks in the US, limited downward price movements by suggesting that oil demand was increasing.
According to data released by the Energy Information Administration (EIA) late Wednesday, US commercial crude oil inventories declined by about 3.7 million barrels to 429.3 million barrels, compared to the market prediction of a fall of around 1.6 million barrels during the week ending Aug. 2.
Meanwhile, ongoing uncertainties regarding when the US Federal Reserve’s (Fed) will lower interest rates continue to influence prices by fueling demand concerns.
The possibility of a 50 basis point cut in the Fed policy rate has risen to over 70%.
Low interest rates also decrease the value of the US dollar against other currencies and support upward price movements by influencing demand positively. The US dollar index fell by 0.24% to 102.95 at 10.06 a.m. local time (0706 GMT), compared to the previous trading session.
Moreover, conflicts in the Red Sea, which is critical for global maritime trade, continue to influence upward price movements by raising supply concerns.
The US Central Command (CENTCOM) said in a statement on Wednesday that it destroyed two Iranian-backed Houthi uncrewed aerial vehicles, one Houthi ground control station, and three Houthi anti-ship cruise missiles in Houthi-controlled areas of Yemen in the past 24 hours.
The weapons presented a ‘clear and imminent threat’ to US and coalition forces and merchant vessels in the region, CENTCOM said.
