Brent drops to two-week lows near $80/bbl

Front-month ICE Brent has slipped by $1.40/bbl on the day, to $80.92/bbl at 09.00 GMT. The futures contract is on track to slump by more than 6% on the week.

PHOTO: Getty Images

Upward pressure

“Crude prices got a boost on hopes that a softening labour market might be enough to prevent the [US Federal Reserve] Fed from sending this economy into a severe recession,” said Edward Moya, senior market analyst at OANDA. US unemployment claims rose from 190,000 to 211,000 in the week to 4 March.

Russia has reiterated its commitment to the OPEC+ alliance, reports Russian state news agency TASS, citing the country's foreign minister Sergey Lavrov. The US Energy Information Administration (EIA) has forecast Russia to cut its oil production by up to 700,000 b/d this month, which would be more than Moscow’s announced 500,000 b/d cut.

Downward pressure:

“High crude oil inventories in the US have weighed on sentiment. The hawkish commentary from Fed Chair [Jerome] Powell earlier this week added to these concerns. That’s despite inventory recording its first weekly fall after several weeks of gains. This dominant narrative is overshadowing signs of stronger demand in China,” ANZ commodity strategist Daniel Hynes says.

The EU has agreed in theory to phase out its use of fossil fuels “well ahead of 2050”. According to OPEC's February outlook, Europe is forecast to consume 13.65 million b/d of crude oil this year. A firm commitment by EU countries to phase out fossil fuels would gradually erode their future oil demand.

By Konica Bhatt

Please get in touch with comments or additional info to news@engine.online