Oil prices stuck in neutral range as Middle East tensions offset concerns about slowing demand

13 Feb 2024 , 10:56 AM

For the second straight day, there was little movement in oil prices on Tuesday as concerns about supply disruptions from Middle East conflicts were outweighed by uncertainty regarding the timing and impact of prospective interest rate reductions by the United States and the demand for gasoline.

Futures for Brent dropped by one penny to $81.99 per barrel. A barrel of U.S. West Texas Intermediate (WTI) crude increased by one cent to $76.93.

Following a 6% increase in oil prices the previous week, prices were virtually unchanged on Monday. The Middle East war has kept prices high.

In a fierce rescue operation that claimed the lives of 74 Palestinians in the southern Gaza city of Rafah, where almost a million residents had sought safety after months of shelling, Israel released two Israeli-Argentine hostages held by Hamas on Monday.

But concerns about interest rates were restricting growth.

According to the New York Fed, the results of its January Survey of Consumer Expectations indicated that both the one-year and five-year inflation outlooks were positive and above the Fed’s goal rate of 2%.

If concerns about inflation postpone the Fed’s interest rate reductions, this could lower oil consumption by reducing economic expansion.

While British inflation and GDP (gross domestic product) figures for the euro zone are expected on Wednesday, U.S. inflation data is anticipated on Tuesday.

Participants in the market anticipated industry data regarding U.S. crude inventories later on Tuesday. In the week leading up to February 9, the average estimate of four Reuters-surveyed analysts was that oil stockpiles increased by roughly 2.6 million barrels.

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