Oil prices experienced a slight decline in Asian trade on Friday, signaling a week that is expected to close with marginal losses as worries about sluggish demand offset optimism regarding tighter supplies due to disruptions in the Middle East.
Amid a series of weak economic indicators globally, concerns about a slowdown in demand intensified. Last week’s data revealing recessions in the UK and Japan during the fourth quarter added to the apprehensions. The outlook for crude demand was further dampened by expectations of higher and more prolonged U.S. interest rates. Signals from the Federal Reserve indicated a reluctance to hasten the process of trimming interest rates.
Brent oil futures expiring in April recorded a 0.4% decline, reaching $83.38 a barrel, while West Texas Intermediate crude futures saw a 0.4% drop to $77.63 a barrel by 20:26 ET (01:26 GMT).
The week indicated losses between 0.2% and 1.1% for both Brent and WTI contracts, underpinned by persistent concerns about demand outlook. This weekly decline interrupted a two-week rally in oil prices that seemed to be losing momentum.
The Purchasing Managers Index (PMI) readings from Japan, the euro zone, and the U.S. depicted a deterioration in business activity throughout February. Additionally, China’s new stimulus measures failed to instill much confidence. The unexpected decrease in weekly jobless claims, combined with a series of hawkish signals from the Federal Reserve, further cast doubt on the likelihood of early interest rate cuts in 2024. The market now anticipates the Fed to initiate rate cuts only in the second half of the year.
