Low economic indicators and concern over interest rates cause oil prices to decline

24 Aug 2023 , 09:24 AM

Early on Thursday in Asian trading, oil prices declined as concerns over disappointing industrial data from major economies overshadowed hope for a bigger-than-expected decline in U.S. crude stocks.

Prior to Federal Reserve Chair Jerome Powell’s address at a central bank conference in Jackson Hole, Wyoming, beginning on Thursday, markets are also searching for clues about how long interest rates will likely stay at their current levels.

Brent crude was down 27 cents, or 0.3%, to $82.94 per barrel, while West Texas Intermediate crude in the United States was down 31 cents, or 0.4%, to $78.58 per barrel.

On Wednesday, manufacturing statistics from numerous purchasing managers’ index (PMI) surveys portrayed a dismal picture of the state of economies around the world, heightening fears about demand.

For the third consecutive month, industry activity in Japan decreased in August. Additionally, corporate activity in the euro zone decreased more than anticipated, especially in Germany. Britain’s economy appeared to be in danger of entering a recession in the upcoming quarter.

In August, U.S. corporate activity was growing at its slowest rate since February, approaching the point of standstill.

Meanwhile, policymakers from the European Central Bank, the Bank of England, and the Bank of Japan are travelling to Jackson Hole, where discussions about raising interest rates for a longer period of time may predominate despite a decrease in inflationary pressures.

Despite continued U.S. sanctions, Iran’s oil minister was quoted by state media as claiming that the country’s crude oil output will hit 3.4 million barrels per day (bpd) by the end of September.

According to news reports, U.S. officials are also crafting a proposal that would loosen sanctions on Venezuela’s oil industry, allowing more firms and nations to import its crude oil, provided the South American country steps toward a free and fair presidential election.

In contrast to analysts’ predictions in a Reuters poll for a 2.8 million-barrel reduction, U.S. crude stocks decreased by 6.1 million barrels in the week ending August 18 to reach 433.5 million barrels.

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