Oil prices faced continued downward pressure on Monday, with Brent crude futures slipping 0.4% to $81.27 a barrel and U.S. West Texas Intermediate crude futures (WTI) declining 0.5% to $76.14 a barrel.
The dip follows a trend from the previous week, spurred by a strengthening U.S. dollar amidst worries that higher-than-anticipated inflation might postpone cuts to U.S. interest rates, consequently impacting global fuel demand.
The market sentiment, previously buoyed by a rally led by Nvidia, appears to be retracting as expectations for prolonged interest rates lift the U.S. dollar, thereby exerting pressure on commodity prices, observed Tina Teng, an independent analyst based in Auckland.
Since November, oil prices have fluctuated between $70 and $90 a barrel, influenced by a combination of factors including increased U.S. supply and apprehensions regarding demand in China despite ongoing OPEC+ supply adjustments amid geopolitical tensions.
Analysts at ANZ noted the absence of fresh catalysts driving crude oil prices, attributing the stagnation to a balancing act between optimistic factors such as reduced OPEC output and geopolitical risks, and pessimistic concerns surrounding Chinese demand.
While geopolitical tensions in the Middle East, particularly Yemeni Houthis' attacks on ships in the Red Sea, have contributed a modest $2 a barrel premium to Brent, Goldman Sachs analysts have revised their summer peak price forecast to $87 a barrel, citing disruptions in the Red Sea that led to larger-than-expected draws in OECD member countries' oil stocks.
Despite an optimistic outlook for global oil demand growth of 1.5 million barrels per day in 2024, Goldman Sachs has adjusted its forecasts, reducing China's demand while increasing projections for the U.S. and India, highlighting the significance of robust non-OPEC supply growth in tandem with solid global demand.
Meanwhile, in the midst of the Israel-Hamas conflict, negotiations for a potential hostage deal involving the United States, Egypt, Qatar, and Israel continue, albeit with uncertainties, as stated by White House national security adviser Jake Sullivan.
