(New York) Oil prices closed close to equilibrium on Thursday, in a cautious market, uncertain of OPEC’s intentions but also of the health of demand, against the backdrop of a slowing American economy.
The price of a barrel of North Sea Brent crude for delivery in September gained 0.03% to close at $85.11.
The barrel of American West Texas Intermediate (WTI), with maturity in August, fell by 0.04%, to 82.82 dollars.
Prices hovered around equilibrium throughout the session, without conviction.
Among the few supporting factors, the decrease in crude stocks in the United States, reported the day before by the American Energy Information Administration (EIA). These reserves fell to their lowest level in five months.
But this figure was offset by the drop in gasoline volumes delivered to the American market (-6.5% over one week) last week.
On Thursday, oil was supported by a stronger-than-expected increase in new weekly jobless claims in the United States. The stock of registered workers had not been this high since November 2021.
This data “encourages us to be attentive to signals of a more marked deterioration in the employment market, which would have consequences for monetary policy,” commented Rubeela Farooqi of High Frequency Economics in a note.
The weakening labor market increases, from an investor perspective, the likelihood of future Fed rate cuts, which would likely strengthen demand for oil.
“Just because the Fed cuts rates by a quarter point doesn’t mean people are going to get in their cars and start driving,” said Bill O’Grady of Confluence Investment.
For the analyst, rate cuts would only be useful in that they could “limit the rise in unemployment” and indirectly benefit oil. “But in general, it takes abrupt changes to change demand.”
Bill O’Grady explains the recent evolution of prices, trapped in a tight range for several weeks, by the lack of visibility regarding the Organization of the Petroleum Exporting Countries (OPEC).
As things stand, the cartel and its allies in the OPEC+ agreement plan to gradually return, starting in October, to the 2.2 million barrels per day of cuts decided unilaterally by certain members of the alliance.
No changes are expected at the group meeting on 1er August, according to anonymous sources cited by the Bloomberg agency.
Operators are “concerned that a major member will increase production to take advantage of current prices” and are hesitant to bet too heavily on the upside, according to Bill O’Grady.
Conversely, “it’s hard to really play on the downside, because the market remains relatively tight,” the analyst points out. “So, we’re stuck.”