Crude oil prices experienced a rise in the previous session, driven by escalating tensions in the Middle East. However, gains were tempered by a strengthening US dollar and inflation data, which dimmed hopes of imminent interest rate cuts by the US Federal Reserve. Despite this, concerns over oil supply lent support to prices as geopolitical tensions persisted in the region.
Brent crude futures concluded with a gain of 49 cents, or 0.55 per cent, reaching $89.50 per barrel, while US West Texas Intermediate crude futures settled up 28 cents, or 0.34 per cent, at $83.85 per barrel. Domestically, crude oil futures settled marginally lower at ₹6,995 per barrel on the multi-commodity exchange (MCX).
Key Factors Influencing Crude Oil Prices:
Israeli Prime Minister Benjamin Netanyahu’s assertion that rulings by the International Criminal Court would not deter Israel’s actions heightened tensions in the Middle East.
Israel’s military reported airstrikes in Lebanon and Gaza in response to attacks, further exacerbating regional tensions.
Analysts noted that ongoing geopolitical conflicts were providing support for oil prices, countering downward pressure from inflationary economic data.
US inflation data revealed a 2.7 per cent increase over the past 12 months, surpassing the Federal Reserve’s two per cent target, potentially impacting future interest rate decisions.
US Treasury Secretary Janet Yellen suggested that peculiar economic factors had contributed to lower-than-expected GDP growth, indicating potential revisions and easing of inflationary pressures.
Despite concerns over economic indicators, crude oil prices rebounded in response to declines in US oil inventories and profit-taking in the dollar index.
Market Outlook:
Analysts observed a recovery in crude oil prices amidst volatile trading conditions, with optimism fueled by declining US oil inventories and Treasury Secretary Yellen’s comments on economic growth prospects. The tightening of the oil market, as indicated by Brent prompt spread backwardation widening to $1.3 per barrel, further supported price levels.
This article reflects the complex interplay of geopolitical tensions, economic indicators, and supply dynamics influencing crude oil prices in the global market.
