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Oil ends lower, posts weekly decline as US rate cut hopes dim

Published 02/22/2024, 09:22 PM
Updated 02/23/2024, 03:32 PM
© Reuters. FILE PHOTO: A view shows oil tanks of Transneft oil pipeline operator at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel/File Photo

By Nicole Jao

NEW YORK (Reuters) -Oil prices fell nearly 3% lower on Friday and posted a weekly decline after a U.S. central bank policymaker indicated interest rate cuts could be delayed by at least two more months.

Brent crude futures settled down $2.05, or 2.5%, at $81.62 a barrel, while U.S. West Texas Intermediate crude futures (WTI) were down $2.12, or 2.7%, to $76.49.

For the week, Brent declined about 2% and WTI fell more than 3%. However, indications of healthy fuel demand and supply concerns could revive prices in the coming days.

Federal Reserve policymakers should delay U.S. interest rate cuts by at least another couple of months, Fed Governor Christopher Waller said on Thursday, which could slow economic growth and curb oil demand.

The Fed has held its policy rate steady in a 5.25% to 5.5% range since last July. Minutes of its meeting last month show most central bankers were worried about moving too quickly to ease policy.

"The entire energy complex is reacting, because if inflation begins to come back it will slow demand for energy products," said Tim Snyder, economist at Matador Economics.

"That is not something the market wants to digest right now, especially as it is trying to figure out a direction," he added.

Some analysts, however, say demand has remained largely healthy despite the impact of high interest rates, including in the United States.

JPMorgan's demand indicators are showing oil demand rising by 1.7 million barrels per day (bpd) month over month through Feb. 21, its analysts said in a note.

"This compares to a 1.6 million bpd increase observed during the prior week, likely benefiting from increased travel demand in China and Europe," the analysts said.

Meanwhile, Gaza truce talks were underway in Paris in what appears to be the most serious push in weeks to halt the conflict in Palestine and see Israeli and foreign hostages released.

Ceasefire talks could prompt the market to anticipate an easing of geopolitical tensions, Tim Evans, an independent oil market analyst, said in a note.

Still, tensions in the Red Sea continued, with attacks by Iran-backed Houthi militants near Yemen on Thursday forcing more shipping vessels to divert from the trade route.

© Reuters. FILE PHOTO: A view shows oil tanks of Transneft oil pipeline operator at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel/File Photo

U.S. energy firms this week added the most oil rigs since November, and the most in a month since October 2022, energy services firm Baker Hughes said.

The oil rig count, an early indicator of future output, rose by six to 503 this week, and increased by four this month.

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same story since Jan 23, high rates could reduce oil use but yet here we are watching the economy bang away. these articles are only spam trying to get you to sell cause they know oil should be even higher based on the piles of money they keep printing. interest rates will probably be high for years and oil should probably be over 100 based on the amount of money they keep printing.
batty I would advise you, because if that believe, to stay out of the crude markets before you have your head handed too you.
Nattu. What evidence do you have for your assertions?
Evidence? Really? Happens daily. Review all the SEC investigations and those are ones that they just caught. Nevermind the ones they didnt. Look at articles that are written on companies stating they are 10 baggers then all of a sudden they aren’t. Pumped up to dump. Oil markets are a balance between supply and demand which is tinkered with all the time. Saudis cutting, USA tooting green agenda while pumping the most oil they ever have. Who knew?
Yeah this reuters only spam nonsense
Supply concerns?! What world do you live in? US has had 2 straight weeks of inventory increases. Not small increases either. Paid for article!
obviously you don't look at fuel inventory or read about the bp refinery that was down or follow global inventory.
Paid for by whom?
This is just noise. Oil will continue to rise.
Oil down 2% today. Your predictive abilities stink.
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