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18 April 2024 | FXGT.com
Oil Prices Decline as Middle East Tensions Ease
- Oil Prices Dip Amid Middle East Tensions: U.S. crude futures extended their losses, hitting a three-week low influenced by traders discounting the immediate risks of a broader conflict in the Middle East and a less optimistic demand outlook. Prices have declined by more than 3% this week, reflecting a broader market correction.
- Geopolitical Risk Premium Reduction: Investors are scaling back on the geopolitical risk premium built into oil prices, anticipating moderated Israeli responses to recent tensions due to international diplomatic pressures.
- Rate Cut Prospects and Weak Chinese Data: The outlook for oil demand has been further compromised by decreased expectations for U.S. interest rate cuts this year and disappointing economic indicators from China for March.
- Global Oil Consumption Trends: JP Morgan has reported that global oil consumption in April has averaged 101 million barrels per day, which is 200,000 barrels per day below their forecasts, highlighting a softening in demand.
- U.S. Crude Inventory Surge: A fourth consecutive week of increase in U.S. crude inventories, with a 2.73 million barrel rise last week, has contributed to the downwards price pressure and has further raised concerns about declining demand.
- Reimposed Sanctions on Venezuela: In response to Venezuelan President Nicholas Maduro’s unmet election commitments, the U.S. announced it would reinstate oil sanctions, adding another layer of complexity to the global oil supply landscape.
- EU Considers New Sanctions on Iran: Following Iran’s recent attack on Israel, European Union leaders are discussing implementing new sanctions against Iran, potentially influencing geopolitical stability and market perceptions.
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