Oil Extends Losses On Perception Of Weak Demand, UN Ceasefire Bid

Meanwhile, ING sees significant tightening later in 2024: File image/Pixabay

Oil on Thursday extended its losses, minimally, amid calls from the United Nations for a ceasefire between Israel and Hamas as well as weaker U.S. gasoline demand data.

As of 16:02 GMT, Brent was down 68 cents to $85.27 per barrel, and West Texas Intermediate was down 69 cents to $80.58 per barrel.

The gasoline data was considered a mixed bag by analysts: although the Energy Information Administration earlier reported that gasoline inventories fell for a seventh week (down 3.3 million barrels to 230.8 million), the proxy for product demand slipped below 9 million barrels, indicating that "gasoline markets may have been overbought," according to Bob Yawger, director of energy futures at Mizuho.

As for the ceasefire, the U.S. confirmed that it had drafted a U.N. resolution that would see the release of 40 Israeli hostages in return for hundreds of Palestinians detained in Israeli jails; but there is no indication whether this will amount to any real resolution.

Bloomberg's take on Thursday's trading was somewhat optimistic: it reported that despite broader markets interpreting the U.S. Federal Reserve's decision in the previous session to maintain rates for the time being as dovish, "the dollar strengthened on Thursday amid a surprise rate cut by the Swiss National Bank."

Also on Thursday, ING Global Market Research predicted that oil will continue to tighten in the second and third quarters due to the extension of  voluntary supply cuts from the Organization of the Petroleum Exporting Countries (OPEC), Ukraine's drone attacks on Russia's refineries, and Houthi disruptions to oil flows through the Red Sea.

As a result, ING Global raised its oil price forecast from $80 per barrel to $87 per barrel for the second quarter and from $82 to $88 per barrel for the third quarter.