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Oil Prices Steady Amid Fourth Consecutive Week of Gains
Oil prices remained relatively steady during Asian trading on Friday, poised to record a fourth consecutive week of gains. This stability comes amidst expectations of robust summer fuel demand and ongoing supply concerns. Brent crude futures, which have surged 7% over the past month, slipped by a mere 2 cents to settle at $87.41 per barrel as of 0143 GMT. Concurrently, U.S. West Texas Intermediate (WTI) crude futures saw a modest increase, climbing to $83.97 per barrel, a 9-cent rise from Wednesday's closing price.
Influence of U.S. Market and Geopolitical Tensions
The U.S. market closure on Thursday for the Fourth of July holiday resulted in thinner trading volumes, with no settlement for WTI. Nevertheless, oil prices experienced upward momentum this week, primarily driven by strong summer demand expectations in the United States, the world's largest oil consumer. Analysts from ANZ Research highlighted that this positive market sentiment has been bolstered by robust mobility indicators and escalating geopolitical tensions in the Middle East.
Significant Inventory Declines and Economic Indicators
The U.S. Energy Information Administration (EIA) reported a substantial drawdown of 12.2 million barrels in oil inventories last week, significantly surpassing analysts' forecast of a 700,000-barrel decline. This unexpected depletion further supported oil prices. Additionally, U.S. economic data revealed an increase in first-time applications for unemployment benefits as well as a rise in jobless numbers. Analysts suggested that these indicators could accelerate potential interest rate cuts by the U.S. Federal Reserve, subsequently supporting the oil market.
Supply Constraints and Global Market Dynamics
On the supply front, Russia's leading oil producers, Rosneft and Lukoil, are set to drastically reduce oil exports from the Black Sea port of Novorossiisk in July. This development underscores supply constraints that are influencing market dynamics. In another significant move, Saudi Aramco has lowered the price of its flagship Arab Light crude for August sales to Asia, setting it at $1.80 per barrel above the Oman/Dubai average. This adjustment reflects the pressure faced by OPEC producers amid rising non-OPEC supply.
Global Events Under Watch
Traders are also closely monitoring other global events that could impact the oil market, including the ongoing conflict in Gaza and the upcoming elections in France and the United Kingdom. These factors add additional layers of complexity and uncertainty to the already volatile market.
