(LONDON) Oil prices were heading slightly lower on Thursday as investors scrutinized signs of weakness in the U.S. economy that could translate into sluggish demand.
By 6:10 a.m. EST (12:10 p.m. Paris), a barrel of Brent North Sea crude for June delivery was down 0.18% at $84.84.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in May, slipped 0.24% to 80.42 dollars.
“Oil fundamentals, which are pushing prices, are giving way to macroeconomic concerns,” said Stephen Brennock, analyst at PVM. On Wednesday, early US jobs data ahead of Friday’s official numbers pointed to a weakening market.
Recession forecasts in the United States are increasing, which could weigh on demand from the world’s largest consumer.
This gloomy context explains why prices did not react on Wednesday to a marked drop in commercial oil reserves in the United States.
However, prices remained up over the week, after the decision on Sunday by certain members of the Organization of the Petroleum Exporting Countries and their allies (OPEC) to limit their production.
“This surprise decision has the potential to push the market into a supply gap” versus demand of “up to 2 million barrels per day in the coming months,” warns Daniel Hynes, analyst at ANZ.
“The message from OPEC is strong, the Organization is ready to defend a floor price of 80 dollars per barrel”, he adds.
Previous voluntary OPEC production cuts have in the past taken place when prices were lower and threatened to make extractions unprofitable in some countries.
The coalition of growers can afford to do this because “response from other growers should be limited,” concludes Hynes.
Both Brent and WTI gained more than 6% over the week.
