After a string of gains, crude oil prices are set to end this week with a loss on worry that interest rates in key markets will remain high, dampening demand for the commodity.
The Federal Reserve and the European Central Bank both signaled recently they were going to postpone their rate cut plans because of the latest inflation data. In the U.S., the latest CPI report revealed a figure higher than expected for March, at 3.5%, while in the eurozone March inflation surprised positively, at 2.4%.
Even so, the ECB decided to keep rates unchanged at 4% for now, most probably motivated by the continued slowdown in economic activity.
Prices, meanwhile, started trade on the last day of the week with a gain pushed higher by worry about the situation in the Middle East and the possibility of a major escalation in the conflict there if Iran retaliates in kind for Israel's strike on its Syrian consulate in Damascus at the start of this month.
The likelihood of such a retaliation, it appears, is relatively slim, according to sources who spoke to Reuters this week. Even so, any kind of retaliation would likely affect oil prices positively.
Another thing that affected prices positively this week was OPEC's latest monthly report, which reiterated the cartel's expectations for demand growth this year at 2.25 million barrels daily, declining to 1.85 million bpd in 2025.
"Despite some downside risks, the continuation of the momentum seen at the beginning of the year could result in further upside potential for global economic growth in 2024," OPEC said in its report.
"In the OECD, the US continues with steady momentum that may outperform the current annual growth forecast," it added.
The EIA, meanwhile, updated its forecast for U.S. oil production growth this year and although the update added 20,000 bpd, the total is still a much lower figure than last year's actual growth rate, at 280,000 bpd versus about 1 million bpd for 2023.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More