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Oil prices dipped on Friday as investors weighed hints of looming interest rate cuts in the United States and Europe against the likelihood of relatively high global supply this year.
Brent crude futures were down 0.54 per cent, or 45 cents, at $82.51 a barrel by 1305 GMT. US West Texas Intermediate crude futures were down 0.66 per cent, or 52 cents, at $78.41, having traded more than $1 higher than Thursday’s settlement earlier in the session.
The benchmarks are heading for a loss on the week, with Brent set for a 1.29 per cent drop from last Friday and WTI 1.95 per cent, although both have been range bound over the last month, between $81.50 and $84 for Brent, and $76-80 for WTI.
“Oil markets have stayed relatively flat over the past couple of weeks despite strong rallies and some all-time highs across equities, gold, bitcoin and bonds,” Investec Head of Commodities Callum Macpherson said.
The IEA’s oil markets and industry division head told Reuters the agency sees a relatively well-supplied market in 2024 with demand growth slowing, something that could put a ceiling on prices.
“Depending on the pace of oil demand growth going forward, the strength of summer demand, any unexpected outages, we see that the market (is) relatively well supplied this year,” Toril Bosoni said on Thursday.
Oil markets also honed in on signals on the timing of possible rate cuts in the United States and European Union.
“It looks as if the path of global investors will remain inextricably linked to the language deployed by central bankers in their times of centre stage,” PVM analyst John Evans said.
Lower interest rates could increase oil demand by boosting economic growth.
The European Central Bank (ECB) will likely start lowering interest rates some time between April and June, French central bank head and ECB policymaker Francois Villeroy de Galhau said on Friday.
Similarly in the United States, Federal Reserve Chair Jerome Powell said on Thursday that the central bank was “not far” from gaining enough confidence that inflation is falling sufficiently to begin cutting interest rates.
US payrolls data will be released at 1330 GMT.