Oil Prices Start the Week With a Loss as Demand Concerns Grow | OilPrice.com

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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By Irina Slav - Apr 29, 2024, 1:30 AM CDT

Crude oil prices began the week with a loss, reversing the climb from last week after the latest U.S. inflation data suggested there will not be any rate cuts anytime soon.

Signals from Israel that a ceasefire with Hamas is still a possibility also helped bring oil down, with Brent crude slipping below $89 per barrel in midmorning Asian trading and West Texas Intermediate at a bit over $83.

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On Friday, the Commerce Department reported an inflation rate of 2.7% for March in personal consumption expenditures, up from an annual rate of 2.5% in February.

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"Markets should breathe a sigh of relief this morning," Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, told Reuters in comments on the figures. "Given the elevated levels of inflation, and this is the new normal for 2024, the market is going to need to get over hopes for Fed rate cuts."

What's good for markets is not necessarily good for all markets because the prospect of continued elevated interest rates is normally taken as bearish for oil because higher rates make the U.S. dollar more expensive and most global oil is traded in dollars. These close ties between U.S. monetary policy and oil prices have traders acting promptly, as evidenced by the fact that every time a delay in rate cuts is announced prices decline.

On the Middle Eastern front, Reuters reported on a statement by Hamas that they would be attending ceasefire talks in Cairo today, rekindling hopes for an end to the conflict. If that happens, oil will have further down to go as the risk of supply disruption would end with the fighting.

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