Oil prices stretch losses into a fourth session on demand concerns

By Myra P. Saefong and William Watts

Natural-gas futures give up recent gains after a weekly update on U.S. supplies

Oil futures finished with a loss on Thursday to stretch their decline into a fourth consecutive session, with speculation over the possibility of an interest-rate hike by the Federal Reserve dulling the outlook for crude demand.

Price moves

West Texas Intermediate crude CL00 for July delivery CL.1 CLN24 fell 70 cents, or 0.9%, to settle at $76.87 a barrel on the New York Mercantile ExchangeJuly Brent crude BRN00 BRNN24, the global benchmark, declined by 54 cents, or 0.7%, at $81.36 a barrel on ICE Futures Europe. Both Brent and WTI tallied their fourth straight session of declines, according to Dow Jones Market Data.June gasoline RBM24 added nearly 0.1% to $2.47 a gallon, while June heating oil HOM24 shed 0.8% to $2.41 a gallon.Natural gas for June delivery NGM24 settled at $2.66 per million British thermal units, down 6.5%, after posting a gain of more than 6% on Wednesday.

Market drivers

A "reintroduction of interest-rate increases, if inflation rises, would hurt demand," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, in emailed market commentary.

Minutes from the Federal Reserve's April 30-May 1 meeting had contributed to a weak tone for oil on Wednesday, as it showed that "various" policy makers had said they'd be willing to raise interest rates if needed to bring down inflation.

Meanwhile, international crude-demand expectations, specifically from Asian markets, continue to be trimmed lower, Gary Cunningham, director of market research at Tradition Energy, told MarketWatch.

U.S. oil production remains strong, he said, but the U.S. is "not the swing supply that will move the market and our demands are more predictable."

The wildcard for oil will be inflation, according to Cunningham. "Should it rear back up during the summer travel season, you could see some U.S. families stay closer to home causing U.S. demand to trim lower, which could accelerate the decline in WTI prices," he said.

See: Here's what the U.S. government is doing to help lower gasoline prices

Oil prices had posted losses on Wednesday following data from the U.S. Energy Information Administration that showed an unexpected rise in U.S. crude inventories in the week ending May 17.

Gasoline stocks fell more than expected, however, and a closely watched proxy of gasoline demand rebounded on a weekly basis ahead of the start of the U.S. summer driving season this holiday weekend, according to the EIA report.

Read: Inflation, EVs and rising fuel efficiency put unexpected dent in gasoline demand

Traders also looked ahead to a decision by the Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, on June 1.

"Unless OPEC+ agrees to additional cuts, which we do not anticipate, we should see WTI fall under $75 and Brent under $80 in the next few weeks," with the potential for another $2 to $3 decline by the end of the year, Cunningham said.

On Nymex on Thursday, prices for natural gas gave back their gains from a day earlier after the latest weekly government update on U.S. supplies.

The EIA reported Thursday that U.S. natural-gas supplies rose by 78 billion cubic feet in domestic supplies for the week ended May 17. Schneider Electric expected to see a climb of 82 billion cubic feet.

Total stocks in storage were 606 billion cubic feet above the five-year average.

-Myra P. Saefong -William Watts

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-23-24 1536ET

Copyright (c) 2024 Dow Jones & Company, Inc.