Oil prices slipped on Friday on the possibility of a nearing Gaza ceasefire that could ease geopolitical concerns in the Middle East, while a stronger dollar and faltering U.S. gasoline demand also weighed on prices. Olga Rolenko | Moment | Getty Images
Oil prices experienced a slight decline on Friday and remained relatively unchanged for the week as the prospect of a ceasefire in Gaza impacted crude benchmarks. However, ongoing conflict in Europe and a decrease in the U.S. rig count helped mitigate the downward pressure on prices.
Brent futures for May delivery settled at $85.43, reflecting a decrease of 35 cents, while U.S. crude settled at $80.63 per barrel, down by 44 cents. Both benchmarks registered a change of less than 1% over the week.
Analysts observed the situation in Gaza closely, noting that successful peace negotiations could lead to Yemen’s Houthi rebels allowing oil tankers to transit through the Red Sea.
U.S. Secretary of State Antony Blinken expressed optimism on Thursday regarding potential ceasefire talks in Qatar between Israel and Hamas. Blinken’s remarks came after meetings with Arab foreign ministers and Egyptian President Abdel Fattah El-Sisi in Cairo, where negotiators in Qatar focused on a proposed truce lasting approximately six weeks.
In the financial realm, the U.S. dollar demonstrated resilience, poised for a second consecutive week of widespread gains following the surprise interest rate cut by the Swiss National Bank on Thursday, which bolstered global risk sentiment. A stronger dollar typically makes oil more expensive for investors holding other currencies, thereby reducing demand.
Despite the possibility of increased global oil movement resulting from a potential ceasefire, factors such as a declining U.S. oil rig count and speculation of easing U.S. interest rates provided support to oil prices.
Jim Ritterbusch, based in Houston and affiliated with Ritterbusch and Associates, noted that optimism in risk appetite persisted following the Federal Reserve’s announcement of no change in U.S. rates during its regular meeting earlier in the week. This sentiment was reflected in record highs for U.S. equities, which often correlate with oil prices.
The U.S. oil rig count declined by one to 509 for the week, according to data from Baker Hughes, indicating a potential reduction in future oil supply.
Despite these market dynamics, the conflict in Eastern Europe continued to influence oil prices. Ukraine reported that Russia launched a significant missile and drone attack on its energy infrastructure, including hitting the country’s largest dam, resulting in blackouts in multiple regions.
Furthermore, there has been speculation within the market regarding potential discounts by Russia on its crude oil barrels in response to the escalating conflict. A deeper discount could make Russian crude more appealing to international buyers.
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