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Brent Crude Oil Futures Decline Amid Economic Concerns
The price of Brent crude oil futures has dropped by 4 cents to $76.77 per barrel on Monday. This decline comes as worries about a recession in the United States, the world’s largest consumer of oil, overshadow fears that escalating tensions in the Middle East could disrupt supply from a key production region, according to Reuters.
Brent futures are now trading at $76.77 per barrel, reflecting a decrease of 0.1%. Meanwhile, West Texas Intermediate (WTI) crude oil futures are priced at $73.39 per barrel, down by 13 cents or 0.2%.
Impact of Ongoing Conflicts on Oil Prices
The market is reacting to the ongoing violence in Gaza, where an Israeli airstrike on Sunday hit two schools, resulting in the deaths of at least 30 individuals, according to Palestinian officials. This attack occurred just a day after peace talks in Cairo concluded without any agreements.
Israel and the United States are bracing for a potential escalation in the region, especially after Iran and its allies vowed to retaliate against Israel for the recent killings of Hamas political leader Ismail Haniyeh and senior Hezbollah military commander Fuad Shukr last week.
Analysts from ANZ have noted, “If this conflict intensifies, it could impact crude oil exports.”
Market Reactions to Geopolitical Tensions
Despite these concerns, Brent crude oil prices fell by over 3% on Friday, reaching their lowest levels since January. WTI also saw a decline of more than 3%, marking its lowest price since June.
Both contracts have reported four consecutive weeks of losses, marking their longest losing streak since November.
OPEC+ Decisions and U.S. Production Stability
The drop in oil prices was further influenced by OPEC+, a coalition of oil-exporting nations including Russia, which decided to proceed with its plan to gradually end voluntary production cuts starting in October.
Analysts had anticipated that OPEC+ would delay the gradual cessation of these voluntary cuts beyond the third quarter. A Reuters survey released on Friday indicated that OPEC oil production rose in July, despite the announced production reductions.
In the United States, the number of active oil rigs remained steady at 482 last week, as reported.
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Baker Hughes Weekly Report
The latest global economic indicators have put downward pressure on oil prices, raising concerns that the sluggish recovery of the world economy could lead to a decrease in fuel consumption.
Recent data released last week revealed that the U.S. economy added fewer jobs than anticipated in the previous month, while manufacturing sectors in the U.S., China, and Europe continue to struggle with weak demand.
As of 9:00 AM Bulgarian time, these developments are significant for market participants.
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