Oil prices remained relatively unchanged on Thursday as concerns over falling fuel demand in the United States, coupled with geopolitical tensions in key Middle Eastern producing regions, tempered market sentiment. Brent crude futures saw a marginal increase of 9 cents to reach $88.11 a barrel at 0420 GMT, following a 0.5% decline in the previous session. Similarly, U.S. West Texas Intermediate crude futures for June rose by 7 cents to $82.88 a barrel, after experiencing a 0.6% drop on Wednesday.
The latest data from the U.S. Energy Information Administration (EIA) revealed a decline in gasoline demand during the week ending April 19, with a 2.8% decrease compared to the previous week and an 11% decline from the same period last year. Additionally, demand for distillate fuel also saw a downturn from the previous week, registering a 4.7% decrease compared to a year ago. These figures reflect a notable reduction in fuel consumption amidst indications of a cooling U.S. business activity in April.
Economic concerns were further compounded by stronger-than-expected inflation and employment data, leading to speculation that the U.S. Federal Reserve may postpone anticipated interest rate cuts. This development has contributed to a decline in economic sentiment, influencing market dynamics.
Emril Jamil, senior oil analyst at LSEG Oil Research, attributed the current weakness in benchmark prices to a shift in market sentiment towards global economic headwinds amidst geopolitical tensions. Despite recent tests above $90 per barrel levels, uncertainties surrounding economic conditions and geopolitical factors continue to weigh on oil market stability.
The combination of declining fuel demand in the U.S. and geopolitical uncertainties underscores the delicate balance between supply and demand dynamics in the global oil market. As investors monitor economic indicators and geopolitical developments, oil prices are likely to remain sensitive to shifts in market sentiment and broader macroeconomic trends.
