By Adedapo Adesanya
Oil prices soared on Thursday after data showed a stabilizing job market in the United States, fueling expectations that the Federal Reserve could begin to cut interest rates soon.
During the session, Brent crude futures went up by 52 cents or 0.6 per cent to $83.27 per barrel and the US West Texas Intermediate (WTI) crude futures increased by 60 cents or 0.8 per cent to $79.23 per barrel.
The number of Americans filing new claims for unemployment benefits fell last week, pointing to an underlying strength in the job market of the world’s largest oil producer and consumer.
If interest rates start dropping, it would stimulate the economy and boost oil demand.
This comes after the US inflation data for April fed market expectations for a September cut in interest rates, which could ease Dollar strength and make greenback-denominated oil more affordable for holders of other currencies.
US consumer prices increased less than expected in April as it rose 0.3 per cen last month after advancing 0.4 per cent in March and February.
In the Middle East, Israel’s tanks pushed into the heart of Jabalia in northern Gaza on Thursday while, in the south, its forces pounded Rafah without advancing, according to reports.
Ceasefire talks mediated by Qatar and Egypt are at a stalemate, with Hamas demanding an end to attacks and Israel refusing until the group is annihilated.
Meanwhile, the International Energy Agency (IEA) trimmed its forecast for 2024 oil demand growth by 140,000 barrels per day, widening the gap with the Organisation of the Petroleum Exporting Countries (OPEC) in terms of expectations for this year’s global demand outlook.
The agency said the lower 2024 forecast was linked to poor industrial activity and lower consumption, particularly in Europe, where a declining share of diesel cars was already undercutting consumption.
In its monthly report on Tuesday, OPEC stuck by its expectation that world oil demand will rise by 2.25 million barrels per day in 2024. The 1.15 million barrels per day difference is about 1 per cent of world demand.
Meanwhile, US crude inventories last week fell 2.5 million barrels, the Energy Information Administration (EIA) said midweek compared with a modest draw of 1.4 million barrels for the previous week and an unexpected decline of 3.1 million barrels for the week to May 10, as estimated by the American Petroleum Institute (API) on Tuesday.
Meanwhile, OPEC and its allies , OPEC+ is likely to hold its June 1 oil policy meeting online, rather than in its headquarters in Vienna as currently scheduled.
Commodity analysts have pointed out that OPEC+ has room to increase output by over 1 million barrels per day in the third quarter without upsetting global oil balances, meaning global markets can comfortably absorb the UAE’s production increase of 200,000 barrels per day.