Oil prices fell slightly in Asian trade on Friday. They were set to close the week a shade lower as concerns over sluggish demand largely offset bets on tighter supplies due to disruptions in the Middle East.
A string of weak economic readings from across the globe spurred more concerns over slowing demand, especially after data released last week showed the UK and Japan both entering recessions in the fourth quarter.
Expectations of higher-for-longer US interest rates also weighed on the outlook for crude demand, as several signals from the Federal Reserve showed the bank was in no hurry to begin trimming interest rates.
USOIL 4-hourly chart
oil futures expiring in April fell 0.4% to $83.38 a barrel, while West Texas Intermediate crude futures fell 0.4% to $77.63 a barrel by 20:26 ET (01:26 GMT).
Fed signals and poor PMIs weigh on markets
and contracts were set to lose between 0.2% and 1.1% this week, with pressure coming from persistent concerns over the outlook for demand.
The weekly losses also stemmed from a two-week rally in oil prices, which now appeared to be running out of steam.
Purchasing managers index readings from Japan, the eurozone, and the US showed a deterioration in business activity through February, while fresh stimulus measures in China inspired little confidence.
An unexpected drop in weekly jobless claims and a barrage of hawkish signals from the Fed cast more doubt over the prospect of early interest rate cuts in 2024. The Fed is now only expected to begin trimming rates in the second half of the year.
US inventories low, Middle East issues support prices
Expectations of tighter supplies still limit losses in crude oil prices. Official data showed that US oil inventories grew less than expected in the week to February 16, especially as a string of refineries resumed production after an extended winter break.
But a smaller-than-expected draw in gasoline inventories raised concerns over weak demand in the world’s largest fuel consumer.
The conflict in the Middle East showed little signs of stopping after the US vetoed a third United Nations proposal for an immediate ceasefire in Gaza.
The Yemeni Houthis also continued to carry out strikes against vessels in the Red Sea, indicating continued disruptions in shipping activity and heralding delayed oil deliveries to parts of Europe and Asia.
