July 31, 2024
New Delhi, India
West Texas Intermediate (WTI) crude oil prices are trading around $76.5 per barrel, recovering from an eight-week low of $74.24 recorded on Tuesday. The rebound is primarily driven by escalating geopolitical tensions in the Middle East, which pose significant risks to oil supply.
Key Highlights:
- Geopolitical Tensions: The Israeli government reported killing Hezbollah’s most senior commander in an airstrike on Beirut on Tuesday. This was in retaliation for a cross-border rocket attack on Israel, escalating tensions despite diplomatic efforts by US and UN officials to prevent a broader conflict in the Middle East.
- Fed Rate Speculation: The Federal Reserve is expected to maintain current interest rates in its upcoming meeting on Wednesday. However, there is increasing speculation about a potential rate cut in September. Such a move could boost economic activity in the United States, the world’s largest crude oil consumer, thereby supporting oil demand.
Economic Factors Influencing Prices:
- US Economic Activity: Expectations of a Fed rate cut in September could stimulate economic growth in the US, increasing crude oil demand.
- China’s Economic Outlook: On the downside, China’s sluggish economic performance is limiting oil price gains. July’s official factory survey indicated a contraction in manufacturing activity for the third consecutive month, impacting the demand from the world’s largest crude importer.
OPEC+ and Market Anticipations:
- OPEC+ Meeting: The Organization of the Petroleum Exporting Countries and allies led by Russia (OPEC+) will hold an online Joint Ministerial Monitoring Committee (JMMC) meeting on Thursday. The group is expected to maintain its current production cut agreement, with plans to begin unwinding some cuts starting in October.
- US Crude Oil Stocks: The US Energy Information Administration (EIA) will report the Crude Oil Stocks Change later in the North American session. The market anticipates a decline of 1.60 million barrels for the week ending July 26, following the previous week’s decline of 3.741 million barrels.
WTI Price: 76.55 +1.82(+2.44%) at 2:15 P.M IST.
WTI’s recent price movement reflects the complex interplay of geopolitical risks, economic expectations, and market fundamentals. As tensions in the Middle East continue to escalate and the Federal Reserve’s rate decisions loom, the oil market remains highly sensitive to both global events and economic indicators.
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