On Thursday, oil prices fell in early trading due to weaker-than-expected U.S. employment and business activity data. This suggests that the economy in the leading oil-consuming nation may be slowing down. Brent crude futures dropped by 30 cents to $87.04 a barrel, while U.S. West Texas Intermediate crude futures fell by 32 cents to $83.56. The subdued activity was due in part to the U.S. Fourth of July holiday, but it also reflects broader concerns about the health of the global economy.
In recent months, the United States has seen an increase in first-time applications for unemployment benefits and a rise in the number of people on jobless rolls. Additionally, private payrolls only increased by 150,000 in June, lower than expected following a rise of 157,000 in May. The ISM Non-Manufacturing index also fell to a four-year low of 48.8 in June, well below the consensus of 52.5.
Despite these weak economic indicators, some analysts believe that this could prompt the Federal Reserve to start cutting rates, which could be beneficial for oil markets by boosting demand. ANZ Research analysts stated that recent data aligns with the Fed’s inclination to ease, predicting a slowdown in growth momentum that would support disinflationary trends and possibly lead to rate cuts.
Overall, while oil prices may have been affected by weaker economic data on Thursday, there are still many factors at play when it comes to determining future market trends for this important commodity.
