Brent Futures and WTI Crude Updates
Brent futures went up by 32 cents (0.44%) to $72.65 a barrel, while U.S. West Texas Intermediate (WTI) crude saw an increase of 12 cents (0.17%) to $68.72. WTI crude fell to its lowest price since December 2021 earlier in the day, trading at $63.64 a barrel.
Factors Influencing Oil Price Plunge
This week, oil prices took a significant hit due to concerns about the U.S. economy and weak manufacturing growth in China, the world's largest oil importer. The situation worsened after the U.S. Federal Reserve raised interest rates on Wednesday, capping near-term economic growth prospects.
Federal Reserve's Signal Provides Market Support
Despite the challenges, the market has found some support from the Federal Reserve's signal that it may pause further interest rate increases. This will allow officials to assess the fallout from recent bank failures and gain clarity on the U.S. debt ceiling dispute.
ECB's Decision to Fight Euro Zone Inflation
The ECB raised its three policy rates by 25 basis points, marking the smallest hike since it began increasing them last summer. The central bank keeps its options open for future moves as it tackles persistently high eurozone inflation.
OPEC+ Voluntary Output Cuts
The Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, collectively known as OPEC+, started voluntary output cuts at the beginning of May. Russian Deputy Prime Minister Alexander Novak confirmed on Thursday that Russia is sticking to its pledge to cut oil output by 500,000 barrels per day (bpd) from February until the end of the year.
Economic Headwinds and OPEC Cut Skepticism
John Kilduff, a partner at Again Capital LLC in New York, explained that the current situation is a mix of economic headwinds and skepticism regarding implementing OPEC output cuts.