Oil futures: Brent caps losses, set for third weekly loss
Quantum Commodity Intelligence – Crude oil futures Friday were cautiously higher as Brent consolidated above the $81/b mark, having posted near four-month lows this week amid concerns over softening demand heading into 2024.
Front-month Jan23 ICE Brent futures were trading at $81.69/b (1753 GMT), compared to Thursday's settle of $80.01/b.
At the same time Dec23 NYMEX WTI was trading $76.68/b, versus Thursday's settle of $75.74/b.
Benchmark crude prices are still down by around 4.5% for the week, in what is a third consecutive weekly decline. Last Friday, Jan23 Brent closed at $84.89/b, while Dec23 WTI settled at $80.51/b.
"The sell-off in oil has come amid fading concern that the Israel-Hamas conflict will impact oil supply, which has allowed traders to focus their attention back on oil fundamentals," said City Index analyst Fiona Cincotta.
Chinese trade data released earlier in the week helped to sink oil prices, as both Brent and WTI retreated to the lowest levels since July, with stuttering global economic growth seen weighing on demand. In particular, sluggish data from the world's largest oil importer highlighted the fragility of the economic recovery.
"The recent decline in prices is driven primarily by the reappearance of demand concerns and not the fading of the geopolitical risk premium, in our view, with several activity and market indicators suggesting a deceleration in industrial activity since Q3 23," said Barclays, lowering its 2024 Brent forecast by $4/b to $93/b.
Inflation
On the inflation front, BNP Paribas said in a report that core inflation is falling in most advanced economies with the exception of Japan, noting the decline was across a number of sectors.
"This dynamic underpins our forecasts that no further rate hikes are expected from the Federal Reserve, the European Central Bank and the Bank of England," said BNP, although noted there would be a delay in lower energy prices factoring into broader inflation figures.
Meanwhile, White House spokesman John Kirby said that Israel will begin to implement four-hour pauses in areas of northern Gaza each day to help deliver humanitarian aid.
"We've been told by the Israelis that there will be no military operations in these areas over the duration of the pause and that this process is starting today," added Kirby.
