Oil Prices End Week Lower Despite Friday Gains

Oil prices ended the week in the red, despite an uptick on Friday, as sentiment improved following Federal Reserve Chairman Jerome Powell’s indications of impending rate cuts.

At 14:30 ET (18:30 GMT), Brent oil futures increased by 2.3% to $79.02 per barrel, while West Texas Intermediate crude futures rose by 2.5% to settle at $74.83 per barrel.

Powell Tees Up Rate Cuts Ahead

“The time has come for policy to adjust,” Powell stated on Friday. He also suggested that larger rate cuts could occur if economic slowdown accelerates quicker than anticipated. This confirmation has somewhat eased fears about a weakening U.S. economy impacting oil demand.

However, the demand outlook remains uncertain as China, a major global oil consumer, faces slower economic growth.

Supply Glut Fears

While U.S. demand appears robust in the short term, as indicated by recent government data showing a significant inventory drawdown, concerns linger that worsening economic conditions could dampen future demand.

Fears of an oil supply glut are also emerging, with U.S. oil production hitting a record high of over 13 million barrels earlier in August. The number of oil drilling rigs has remained unchanged at 483 from the previous week, according to Baker Hughes.

The Organization of Petroleum Exporting Countries and its allies, known as OPEC+, plan to boost output later this year despite recently adjusting their outlook for global oil demand due to weak demand signals from top oil importer China.

Israel-Hamas Ceasefire in Focus

U.S. officials have indicated that a ceasefire between Israel and Hamas is near, although media reports suggest both parties are less confident about reaching an agreement. Earlier this week, Israel reportedly accepted a U.S.-proposed bridging agreement, which Hamas criticized as favoring Israel.

The ongoing Israel-Hamas conflict has led traders to apply a risk premium to oil prices due to potential supply disruptions, though the actual impact on crude supplies has been limited so far.

*(Peter Nurse, Ambar Warrick contributed to this article.)