On July 23, 2024, oil prices held steady as conflicting factors influenced the market. Brent crude futures for September stood at $82.58 per barrel, while U.S. West Texas Intermediate crude reached $78.56 per barrel.
The European Central Bank's Vice-President, Luis de Guindos, hinted at a potential interest rate cut in September 2024, boosting investor sentiment. Lower borrowing costs typically support oil demand and prices. This development offset pressure from renewed hopes for a ceasefire in Gaza.
"Oil is range-trading, only moderately up, and that support might come from most European stock markets in positive territory, benefiting from a risk on environment,"
In the United States, some market participants are anticipating rate cuts by the Federal Reserve in September 2024. Meanwhile, efforts to reach a ceasefire between Israel and Hamas have gained momentum, following a plan outlined by U.S. President Joe Biden in May 2024.
Biden is scheduled to meet with Israeli Prime Minister Benjamin Netanyahu on July 25, 2024, to discuss the ceasefire and other topics, including Iran. The ongoing conflict in Gaza has supported oil prices due to potential supply disruptions.
Market analysts are closely watching upcoming events that could impact oil prices:
A preliminary Reuters poll suggests U.S. crude stocks may have decreased by 2.5 million barrels in the week ending July 19, 2024. Gasoline stocks are expected to have dropped by 500,000 barrels.
Morgan Stanley analysts predict that oil market fundamentals will likely balance out by the fourth quarter of 2024 and potentially move into a supply surplus by 2025. Priyanka Sachdeva, a senior market analyst at Phillip Nova, cautioned that further weakening of demand signals, combined with a resolution in Gaza, could lead to a decrease in oil prices.
The oil market remains sensitive to global economic factors and geopolitical events. As the European Central Bank and Federal Reserve consider potential rate cuts, and efforts for peace in the Middle East continue, investors will be closely monitoring these developments and their impact on oil prices in the coming months.