On Friday, oil futures experienced a decline, marking the third consecutive week of losses, as traders closely monitored the latest monthly U.S. jobs data and developments regarding the Federal Reserve’s interest-rate decisions. Saudi Arabia’s energy minister further contributed to market sentiment by suggesting that OPEC+ might reconsider its plan to unwind voluntary production cuts later this year.
West Texas Intermediate (WTI) crude for July delivery closed at $75.53 per barrel on the New York Mercantile Exchange, down by a mere 2 cents, ending the week 1.9% lower. Similarly, Brent crude, the global benchmark, saw a decline of 25 cents to settle at $79.62 a barrel on ICE Futures Europe, registering a weekly loss of 1.8%. The downward trend extended to gasoline and heating oil futures, which ended the week around 1.4% lower.
Market analysts observed a mixed response to the Bureau of Labor Statistics’ report, which showed a robust increase of 272,000 new jobs added in May, exceeding market expectations. However, concerns were raised over a rise in unemployment to 4%, signaling potential challenges in the labor market. Despite this mixed data, speculators initially discounted the likelihood of the Federal Reserve announcing interest rate cuts in the near term.
The recent decision by OPEC+ to maintain production curbs through the end of 2025, coupled with plans to gradually unwind voluntary production cuts, contributed to market uncertainty earlier in the week. The lack of clarity surrounding future production targets led to a sell-off, with investors adopting a cautious approach.
In a bid to support oil prices, the U.S. Energy Department announced plans to purchase an additional 6 million barrels of oil for the Strategic Petroleum Reserve at prices below $79 per barrel. This move aims to provide stability to the oil market amid ongoing volatility.
At a Russian economic forum in St. Petersburg, Saudi Energy Minister Prince Abdulaziz bin Salman emphasized the possibility of pausing or reversing voluntary production cuts, echoing sentiments expressed by Russian Deputy Prime Minister Alexander Novak. These remarks underscored OPEC+’s commitment to maintaining stability in the oil market, despite ongoing uncertainties.
Looking ahead, market analysts anticipate a gradual recovery in oil prices, with Commerzbank revising its forecast to $90 a barrel for Brent crude by the end of 2024 and into the following year. Despite the recent downturn, geopolitical factors and supply dynamics are expected to support oil prices in the medium term.