Oil Prices Fall on U.S. Data and Supply News; Inventory Declines May Boost Support

Price

• Oil prices were steady in early Asian trading on Friday but were poised to end the week lower, as downward revisions to U.S. employment data raised demand concerns and ceasefire talks in Gaza eased worries about supply disruptions.
• Brent crude futures were down a cent to $77.21 per barrel by 0033 GMT. U.S. West Texas Intermediate crude futures were up 4 cents to $73.05 per barrel. MCX crude oil prices opened at 6142 with a fall of 0.26%.

Demand and Supply

• Minutes of the Federal Reserve’s July meeting, released on Wednesday, showed that most Fed officials thought the central bank was on track for an interest rate cut next month. Still, Brent futures were set to post a weekly decline of about 3%, while WTI was on course to shed nearly 5%.
• Both benchmarks had hit their lowest levels since early January earlier in the week, after the U.S. government revised its estimate of jobs added by employers in the country this year through March sharply lower. This sparked concerns about a potential recession in the U.S. hurting demand in the top oil-consuming nation.
• Recent data from China, the top oil importer, has also pointed to a struggling economy and slowing oil demand from refiners there.

News

• Recent data from China has indicated a struggling economy and slowing oil demand from refiners. A renewed push for a ceasefire in Gaza between Israel and Hamas also helped ease supply worries and weighed on oil prices.
• U.S. and Israeli delegations started a new round of meetings in Cairo on Thursday to resolve differences over a truce proposal.
• Some analysts say there are signs that oil could find support in the weeks ahead as global oil inventories have declined over the past two months.
• The Public Interest and Accountability Committee (PIAC) has disclosed that Ghana’s crude oil production declined for the fourth consecutive year in 2023.
• Emerita Professor Elizabeth Ardayfio-Schandorf, the Chairperson of PIAC, revealed this at a stakeholder engagement in Ningo-Prampram in the Greater Accra Region. She said production dropped from a high of 71.44 million barrels in 2019 to 48.25 million barrels in 2023, representing an annual average decline of 9.2 percent.

Expert's Opinion

Despite the persistent bearish sentiment in the oil market, which has overshadowed bullish fundamentals, there are indications that oil prices could find support in the coming weeks. The recent decline in global oil inventories over the past two months suggests that supply growth is not keeping pace with demand, potentially leading to a stabilization or increase in prices.