Oil prices drop to seven-week low
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The news: Oil prices fell to a seven-week low overnight on a surprise build up in US crude stocks, the prospect of a Middle East ceasefire agreement and as hopes faded for near-term US interest rate cuts that could boost demand.
The numbers: Brent crude futures fell 3.4% to USD83.44 ($128) a barrel, while US West Texas Intermediate (WTI) crude lost 3.6% to USD79 a barrel marking the lowest close for both benchmarks since 12 March and leaving both in technically oversold territory for the first time since December 2023.
The context: Reuters reported the decline came after the US Energy Information Administration (EIA) said energy firms added a surprise 7.3 million barrels of crude into stockpiles during the week ended 26 April, compared to analysts forecast for a withdrawal of 1.1 million barrels.
In the Middle East, expectations grew that a ceasefire agreement between Israel and Hamas could be in sight following a renewed push by the US and Egypt.
Meanwhile, the US Federal Reserve held interest rates steady and signalled it is still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings.The Fed's latest policy statement did note that "inflation has eased" but any delay in rate cuts could slow economic growth and dampen demand for oil.
The source: Reuters
