Oil prices drop in early trade amid fears about demand

28 Jul 2023 , 10:00 AM

Early Friday morning Asian trading saw a decline in oil prices as demand worries outweighed positive economic statistics.

Brent crude was down 59 cents, or 0.7%, to $83.65 per barrel, but it was still on course for a weekly gain of 5%. West Texas Intermediate (WTI) crude for the United States dropped 51 cents, or 0.6%, to $79.58 a barrel, on pace for a weekly increase of 5.2%.

Last session, oil prices increased as optimism about a global economic recovery increased in response to positive earnings announcements and better-than-anticipated U.S. economic statistics.

The Commerce Department reported on Thursday that the U.S. second quarter gross domestic product increased at 2.4%, exceeding the 1.8% consensus, confirming Chairman of the U.S. Federal Reserve Jerome Powell’s belief that the economy can reach a so-called ‘soft landing’.

However, recent interest rate increases by central banks around the world in an effort to control stubborn inflation sparked concerns about long-term demand.

As was generally predicted, the U.S. Federal Reserve raised interest rates by another 25 basis points on Wednesday, and the European Central Bank did the same on Thursday.

Early this week, oil prices dropped as a result of news showing that U.S. crude stocks dropped less than anticipated and a quarter-point hike in interest rates by the U.S. Federal Reserve, which left the door open for a future increase.

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