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Oil prices drop 1% and record strong weekly losses

Oil prices fell by 1% at the end of trading on Friday, May 3, 2024, amid fears of supply shortages with the possibility of OPEC+ continuing production cuts. It also recorded strong weekly losses.

The two benchmarks (Brent and West Texas Intermediate) recorded their largest weekly losses in 3 months due to uncertainty about demand and the decline of tensions in the Middle East. This reduces supply risks.

Oil prices witnessed volatile trading at the end of trading on Thursday, May 2, with Brent crude rising and West Texas Intermediate crude declining, after extended losses over the past three sessions.

At the end of the session, futures prices for standard Brent crude, for July 2024 delivery, fell by 0.85%, reaching $82.96 per barrel, and recorded weekly losses of 6%.

At the same time, US West Texas Intermediate crude futures, for delivery in June 2024, fell by 1.06%, reaching $78.11 per barrel, and recorded sharp weekly losses of 7%, according to figures tracked by the specialized energy platform.

Oil prices fell to their lowest level in 7 weeks on Wednesday, after the US Federal Reserve kept interest rates steady. Which may limit economic growth this year and limit the increase in demand for oil.

Oil prices recorded weekly losses; Investors are concerned that higher interest rates for a longer period could curb growth in the United States, the world’s largest oil consumer, and in other parts of the world.

“With the US driving season approaching, higher inflation may prompt consumers to choose shorter holiday trips,” analysts at ANZ Research said in a note on Friday.

The market is now looking forward to US economic data and indicators of future crude supplies from the world’s largest producer.

The US Federal Reserve kept interest rates steady this week and pointed to recent disappointing high inflation readings that may make interest rate cuts take some time.

Geopolitical risk premiums from the war in Gaza, which kept oil prices high due to global supply risks, are also fading; Israel and Hamas are considering a temporary ceasefire and holding talks with international mediators.

Brent crude is heading towards a weekly loss of 6.3%, while West Texas Intermediate crude is heading towards a loss of 5.6% over the week.

The decline in oil prices comes just weeks before the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, in the alliance known as OPEC+.

The OPEC+ alliance is moving to extend its voluntary oil production cuts of 2.2 million barrels per day beyond June, to confront the decline in oil demand, but the alliance has not begun formal talks before the June 1 meeting, Reuters reported.


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