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Oil Prices See Rebound with U.S. Purchase Plans

May 2, 2024

Oil prices rebounded on Thursday as the U.S. signaled potential plans to replenish its strategic petroleum reserves. This news offered some support to the market after it faced a downturn driven by multiple factors including geopolitical hopes and economic uncertainties.

Chart of oil prices seen rising on the VT Markets app

Picture: Oil prices on the rise as seen on VT Markets app.

Brent Crude and WTI Prices Rally

July contracts for Brent crude rose by 21 cents to $83.65 a barrel, while U.S. West Texas Intermediate (WTI) crude for June increased by 22 cents to $79.22 a barrel. This recovery halted three consecutive days of losses, during which both benchmarks fell over 3% and hit a seven-week low.

Uncertainties on U.S. Interest Rates

Earlier declines in the week stemmed from optimism over a potential ceasefire between Israel and Gaza, alongside growing uncertainties about U.S. interest rate directions and a significant rise in oil inventories. The U.S. Energy Information Administration reported that crude inventories unexpectedly surged by 7.3 million barrels last week to reach their highest point since June, contrasting with analysts’ expectations of a 1.1 million-barrel draw.

Geopolitically, the ongoing conflict in Gaza and Israeli Prime Minister Benjamin Netanyahu’s commitment to continue military actions in Rafah highlight ongoing regional tensions, which could influence oil supply routes and global prices.

Fed Remains Cautious

The Federal Reserve has maintained interest rates but expressed concerns over recent disappointing inflation figures, suggesting a cautious approach toward future rate cuts. This stance could potentially slow economic growth and reduce demand for oil.

With potential shifts due to U.S. strategic reserve activities and ongoing international tensions, the landscape presents various opportunities in the oil market. If you’re prepared to navigate these market movements and leverage potential opportunities, consider taking the next step in your trading journey.

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