Oil prices remained steady on Thursday, with Brent crude futures edging up 9 cents to $88.11 a barrel and U.S. West Texas Intermediate crude futures gaining 7 cents to $82.88 a barrel. The slight increase comes as falling fuel demand in the U.S., the world’s largest oil consumer, is offset by concerns over escalating tensions in the Middle East.
Data from the U.S. Energy Information Administration (EIA) showed a 2.8% drop in gasoline demand in the week to April 19, along with a decline in distillate fuel demand. This decrease in fuel consumption is occurring alongside signs of a cooling U.S. economy, with weaker business activity in April and stronger-than-expected inflation and employment data potentially delaying anticipated interest rate cuts by the Federal Reserve.
“The current weakness in benchmark prices is due to market sentiment refocusing on global economic headwinds over geopolitical tensions,” said Emril Jamil, senior oil analyst at LSEG Oil Research. Geopolitical concerns, including the escalating conflict between Israel and Hamas in the Gaza Strip, could potentially disrupt oil supplies in the region.
Despite these uncertainties, oil prices this quarter will also be influenced by factors such as major producer supply cuts, economic data from China and the Eurozone, and expectations of increased demand as the Northern Hemisphere enters the summer season. Analysts are closely watching for further developments in the Middle East and the release of U.S. GDP and personal consumption expenditure data to gauge the Fed’s rate intentions.