Oil prices hold steady, but demand outlook murky

16 Feb 2024 , 09:22 AM

On Friday, oil prices fluctuated as investors considered the dwindling demand prediction by a powerful organisation and the unimpressive U.S. retail sales data that raised hopes for interest rate cuts in the country.

Brent crude futures fell 11 cents, or 0.1%, to $82.75 a barrel. At $78.04 a barrel, U.S. West Texas Intermediate crude futures increased by one penny.

A greater-than-expected decline in U.S. retail sales on Thursday led to anticipation that the Federal Reserve would soon begin lowering interest rates in the upcoming months, which may be good for oil demand. As a result, both contracts increased by more than 1%.

According to a report from the U.S. Commerce Department, retail sales fell 0.8% in January, marking the largest decline since February 2023. Retail sales were predicted by economists surveyed by Reuters to decline by 0.1%.

The industrialised world’s energy watchdog, the Paris-based International Energy Agency (IEA), weighed in on market sentiment on Thursday by stating that the growth of global oil demand is losing momentum and cutting its growth forecast for 2024. This is in stark contrast to the view held by the Organisation of the Petroleum Exporting Countries (OPEC).

According to the IEA’s monthly report, the world’s oil demand is expected to increase by 1.22 million barrels per day (bpd) this year, which is a modest decrease from the forecast made last month. On Tuesday, OPEC continued to expand at the far higher rate of 2.25 million barrels per day.

In the Middle East, Hezbollah reported on Thursday that it had launched dozens of missiles at a town in northern Israel as a ‘preliminary response’ to the deaths of ten civilians in southern Lebanon on the deadliest day for civilians in the country’s four months of cross-border fighting.

As footage of commotion, yelling, and firing in dim, smoke- and dust-filled hallways appeared, Israeli soldiers said on Thursday that they had attacked Gaza’s largest operational hospital.

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