Brent prices fall due to demand expectations

Oil prices were mixed on Friday as investors assessed expectations of slowing demand and weak US retail sales data raised hopes for a cut in US interest rates.

According to Reuters, by 0131 GMT, Brent crude futures fell 11 cents, equivalent to 0.1%, to $82.75 per barrel. While US West Texas Intermediate crude futures rose one cent to $78.04 per barrel.

The two benchmarks rose more than 1 percent on Thursday, as a larger-than-expected decline in US retail sales raised hopes that the Federal Reserve (the US central bank) would begin lowering interest rates in the coming months, which could be positive for oil demand.

A US Department of Commerce report on Thursday showed that retail sales fell 0.8% last month, the largest decline since February 2023. Economists polled by Reuters had expected retail sales to decline only 0.1%.

Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, said that hopes for lowering US interest rates provided support on Thursday, but investors are evaluating the situation before the long holiday in the United States, pointing to the holiday there next Monday.

“While closely monitoring interest rate trends, investors will continue to evaluate whether geopolitical risks in the Middle East will spill over into crude oil supply chains,” he added, expecting WTI to trade in the $70 to $80 range for a while.

Putting pressure on market sentiment, the International Energy Agency said on Thursday that global oil demand growth is losing momentum while reducing its growth forecast for 2024, in sharp contrast to OPEC expectations.

The International Energy Agency’s monthly report stated that it expects global oil demand to grow by 1.22 million barrels per day this year, a slight decrease from last month’s estimates. While OPEC on Tuesday stuck to higher growth expectations at 2.25 million barrels per day.