Oil prices remained stable on Thursday as investors navigated conflicting signals regarding crude demand.
Brent crude oil, against which Nigerian oil is priced, settled at $85.11 a barrel, edging up by 3 cents, while U.S. West Texas Intermediate (WTI) crude dipped by 3 cents to $82.82 a barrel.
The stability comes as the U.S. economy shows signs of slowing, with unemployment benefit applications rising more than expected.
Initial claims increased by 20,000 to a seasonally adjusted 243,000 for the week ending July 1, prompting speculation that the Federal Reserve might cut interest rates sooner than anticipated. Lower rates could boost spending on oil, creating a bullish outlook for demand.
Fed officials suggested that improved inflation and a balanced labor market might lead to rate cuts, possibly by September.
“Healthy expectations of a Fed rate cut in the not-so-distant future will limit downside,” noted Tamas Varga of oil broker PVM.
However, rising jobless claims signal potential economic easing, which could dampen crude demand.
John Kilduff of Again Capital highlighted the impact of a slowing economy on oil consumption despite a significant drop in U.S. crude inventories last week.
Global factors also weighed on the market. China’s economic policies remain steady, though details are sparse, affecting investor sentiment in the world’s largest crude importer.
Meanwhile, the European Central Bank maintained interest rates, citing persistent inflation.
An upcoming OPEC+ meeting in August is expected to assess market conditions without altering output policy, according to sources. This meeting will serve as a “pulse check” for market health.
Overall, oil prices are caught between economic concerns and hopes of a rate cut, maintaining a delicate balance.