Oil prices increased on Friday over robust demand indicators in the US as crude oil inventories declined and Federal Reserve (Fed) minutes show interest rate cuts are likely in 2024 while Israel-Palestine conflict continue heightening fears of a wider war for the Middle East.
International benchmark crude Brent traded at $78 per barrel at 10.23 a.m. local time (0723 GMT), a 0.52% gain from the closing price of $77.59 a barrel in the previous trading session on Thursday.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $72.69 per barrel, up 0.69% from Thursday’s close of $72.19 per barrel.
Investors were awaiting the minutes of Fed meeting in December to see the direction of the US economy and country’s interest rate policy in the coming months.
According to the minutes released on Wednesday, US Federal Reserve members believe interest rates are near their ‘peak’.
‘In discussing the policy outlook, participants viewed the policy rate as likely at or near its peak for this tightening cycle, though they noted that the actual policy path will depend on how the economy evolves,’ the Fed’s December meeting minutes revealed.
The Fed skipped a rate hike for the fourth time in 2023 on Dec. 13, keeping the federal funds rate unchanged between the 5.25% – 5.5% target range — still the highest in 22 years.
The central bank made 11 interest rate increases from March 2022 through July 2023 to fight record inflation that climbed during the summer of 2022 to its highest in more than four decades.
President of Richmond Federal Reserve Bank Tom Barkin on Thursday said during his speech at the Raleigh Chamber of Commerce in North Carolina that ‘a soft landing is increasingly conceivable but in no way inevitable.’
Country’s crude oil inventory data released by the Energy Information Administration (EIA) on Thursday showed that demand is upsurging in the world’s largest oil consuming country.
According to data, US commercial crude oil inventories decreased by around 5.5 million barrels to 431.1 million barrels, compared to the American Petroleum Institute’s expectation of a draw of around 7.4 million barrels.
However, gasoline inventories rose by around 10.9 million barrels, limiting further price upticks.
-Geopolitical developments in Middle East contribute to price upticks
Prices also continue receiving help from the rising tension in the Middle East after Hamas’ Political Bureau Deputy Chairman Saleh al-Arouri and six others were killed Tuesday in an Israeli drone attack in the Dahieh district of Beirut, referred to as Hezbollah’s stronghold.
Oil prices saw further gains after Libya’s largest oilfield, the Sharara, shut down completely amid protests.
Around 300,000 barrels of oil per day is now at risk in Libya’s two oil facilities, El-Feel and Sharara, country’s largest oil field, due to protests over high fuel prices and a lack of job opportunities in the country.
