Fourth Straight Loss For Oil As Traders Ignore Major Signs Of Demand Surge

by Ship & Bunker News Team
Thursday May 23, 2024

It's shaping up to be a dismal trading week for oil, as analysts convinced that demand is in peril caused prices on Thursday to drop for a fourth straight session.

As of 1735 GMT, Brent slid by 76 cents to $81.14 per barrel, and West Texas Intermediate was down 88 cents to $76.69 per barrel.

No specific event motivated traders on Thursday, merely a continuation of worries that central banks postponing a lowering of interest rates would impact demand; and indeed, some analysts have argued that their stance will keep inflation higher by holding down consumer spending.

Minutes from the U.S. Federal Reserve's latest meeting released in the previous session revealed that policymakers are doubtful if current interest rates are high enough to tame inflation, something that sent a chill throughout the analytical community.

More worries stemmed from S&P Global data showing that while U.S. business activity increased this month, there was also a surge in the price of manufacturing, suggesting a potential increase in goods inflation in the months ahead.

Still, the Energy Information Administration reported U.S. gasoline demand at its highest since November, which bodes well for the start of the summer driving season in that country.

Also, UBSforecasted the oil market going into deficit and predicts Brent will climb to $91 per barrel in coming months; it also thinks demand will grow at a healthy rate of $1.5 million barrels per day (bpd) for this year, which is above the long-term 1.2 million bpd growth rate.

For its part, Bloomberg noted that even though global demand is heading towards a new annual record, "Crude prices have retreated about 11 percent from this year's peak due to plentiful supplies from the Americas, a fragile economic outlook in China and uncertainty over U.S. monetary policy."

Accordingly, it is widely  expected that the Organization of the Petroleum Exporting Countries (OPEC) will extend its current output curbs into the second half of the year when it meets on June 1.