Oil prices saw marginal changes during the week ending Feb. 16 as bearish US macroeconomic data countered escalating supply fears driven by the ongoing tension in the Middle East.
International benchmark Brent crude traded at $82.11 per barrel at 3.55 p.m. local time (1255 GMT) on Friday, decreasing by around 0.09% relative to the closing price of $82.19 a barrel on Friday last week.
West Texas Intermediate (WTI), the American benchmark, traded at $77.48 a barrel at the same time on Friday, for a rise of around 0.83% from last Friday’s session that closed at $76.84 per barrel.
Oil markets started the week on a bearish sentiment over reports that Israel had conducted a ‘series of strikes’ on southern Gaza that have now concluded.
However, worrisome reports from the region have continued throughout the week as Israel intensified attacks and Netanyahu rejected Hamas’s offer of a three-stage plan, which constituted a major obstacle for efforts made by Egypt and Qatar to mediate a ceasefire.
The Yemeni Houthi group’s attacks in the Red Sea also put upward pressure on prices.
The Houthis have been targeting cargo ships in the Red Sea owned or operated by Israeli companies or those transporting goods to and from Israel in solidarity with Gaza, which has been under an Israeli onslaught since Oct. 7.
A coalition led by the US has conducted intermittent airstrikes since Jan. 12 that have targeted ‘Houthi locations’ in parts of Yemen in response to the attacks in the Red Sea.
The US response has been occasionally met with counter-responses from the group.
-Investors focus on economic data in the US
Recent data from the US Commerce Department has sparked concerns about a shift in the Federal Reserve’s approach to interest rates, as January’s retail sales figures showed a significant downturn, dropping 0.8% to $700.3 billion, a stark contrast to the anticipated 0.2% decline.
This unexpected downturn in consumer spending, a key driver of economic activity, has led to speculation that the Federal Reserve may delay any planned interest rate cuts.
Adding to the economic data mix, the Energy Information Administration (EIA) reported a surprising increase in crude oil inventories, with a jump of 12 million barrels to 439.4 million barrels last week.
Far exceeding analysts’ forecasts of an 8.5 million-barrel rise, the figures indicated a potential oversupply in the market to exert downward pressure on oil prices.
Furthermore, the International Energy Agency (IEA) released its oil market report, forecasting a continued supply glut into 2024.
According to the IEA, global oil demand is expected to increase by 1.2 million barrels per day to 103 million barrels per day this year. However, the global oil supply is projected to outpace demand, reaching 103.8 million barrels per day in 2024.
