Oil Prices Tumble as Demand Concerns Boost Bearish Sentiment

Source The Ghana Report

Oil prices are experiencing a sharp decline this week, its first in two weeks.

The period is ending with four consecutive sessions of losses and Friday is on course to close in the red as well. On Thursday, crude oil settled at multi-month lows, driven by concerns over prolonged high U.S. interest rates which could stifle demand growth in the world’s largest oil market. This decline is significant in a week marked by mixed economic signals and inventory reports that have traders on edge about the near-term outlook for crude oil.

Interest Rates and Economic Activity

U.S. interest rates have remained a focal point for market participants. The minutes from the latest Federal Reserve policy meeting revealed ongoing uncertainty among policymakers about whether current interest rates are sufficient to curb persistent inflation. The prospect of higher-for-longer interest rates looms large, potentially hampering economic activity and, by extension, oil demand. High interest rates increase borrowing costs, which can slow down consumer spending and business investment, leading to reduced demand for oil and energy products.

Inventory Data and Demand Indicators

Adding to the bearish sentiment, the Energy Information Administration (EIA) reported an unexpected increase in U.S. crude oil inventories. Last week, crude stocks rose by 1.8 million barrels, defying expectations of a 2.5 million-barrel draw.

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