Oil prices are unchanged early in Friday’s Asian trade, but the market is set to post a weekly decline. The optimistic prognosis for the oil supply has helped to overshadow the recent downgrade of the U. S. employment data, which has led to doubts regarding the oil demand.
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Current Market Trends
Brent crude futures were down a cent to $77.21 per barrel. At the same time, futures for WTI crude of the United States increased by 4 cents and cost $73 per barrel. 05 per barrel. Even after Thursday’s recovery, ending the five sessions-long slump, both benchmarks are on their way to record weekly drop: Brent, by about 3 percent, and WTI, by nearly 5 percent.
The Employment Data of U.S
The decrease in oil prices this week has been attributed mainly to a large downward adjustment of employment forecast in the United States. Recently the U. S government adjusted downwards its labor market indicator based on the employers’ expectations of job creation between January and March 2012, signaling a possibility of a recession in the world’s largest oil-importing country. This has given rise to concerns that a decline in the U.S economic growth rate may lower the oil demand.
The relief of supply concerns in ceasefire talks
Extending bear fundamentals, the cease-fire discussion between Israel and Hamas in the Gaza Strip has minimized the risk of supply cut-off in the oil market. U.S and Israeli contingents are negotiating in Cairo to agree to disagree on the terms of a ceasefire package. Saying this, the advancement in these talks has added more pressure to oil prices by reducing supply shock risks.
China’s Economic Slowdown
Besides, over the past weeks, economic indicators coming out of the world’s largest oil importer, China, have been woeful. The rate at which China’s economy has reduced has also put pressure on Chinese refiners to lower their oil demand, thus putting further pressure on the prices of oil.
Future Outlook
Nonetheless, some technical analysts are forecasting that oil prices could be supported in the coming weeks. The supply growth is down and is lower than the demand as the global oil inventories have been decreasing for the last two months as the UBS analysts have predicted. This status could assist in restoring Brent crude prices to the range of $85/100 km shortly.
Conclusion
The fact is that the long-term portrays a completely different picture where demand worries are over and supply worries are beginning to ease, thus it is not bad for the market to try to recover from the oil prices. The areas that will most likely be of interest are interest rates set by the U. S Federal Reserve, the continuing tensions on the geopolitical front, and the supply-demand analysis globally.
