Oil closes lower, with adjustment in expectations for interest rates and rise in US inventories

Oil closed lower this Thursday, 4th, under pressure amid readjustments in expectations for United States interest rates and the rise in American gasoline stocks. The session was marked by volatility, as investors monitor developments in conflicts in the Middle East.

On the New York Mercantile Exchange (Nymex), WTI oil for February 2024 fell 0.70% (-US$0.51), to US$72.19 per barrel, while Brent for March, traded on the Intercontinental Exchange ( ICE), fell 0.84% ​​(-US$ 0.66), to US$ 77.59 per barrel.

Oil came under pressure from strong US employment and service sector data, which injected caution into markets by making investors less optimistic about aggressive interest rate cuts by the Federal Reserve (Fed, the US central bank).

The commodity accelerated its decline after the American government released weekly inventory figures, which revealed a larger-than-expected decline in oil inventories, but an increase of 10.9 million barrels in gasoline inventories.

At the same time, oil received support from the unfolding conflicts in the Middle East, with recent explosions in Libya and Iran, attacks by the Houthis in the Red Sea and threats from Hezbollah.

Capital Economics believes that energy prices will fall in 2024. However, the consultancy considers that the large downward movements are already behind us. “Supply was not directly affected, but the Israel-Hamas conflict, along with tensions in the Red Sea, increased volatility in energy markets,” commented Capital in a report. “We expect oil prices to decline this year as the Organization of the Petroleum Exporting Countries and allies (OPEC+) increase production, especially in the second half of the year.”