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Oil Prices Drop 2% on False Rumors of Middle East Ceasefire

Oil Prices Drop 2% on False Rumors of Middle East Ceasefire

Oil prices fell over 2% on Thursday after false market speculation that Israel had agreed to a Gaza ceasefire proposal.

Instead, a Qatar official told Reuters that Hamas has received a ceasefire proposal positively, but has not yet responded to it.

Brent crude futures plummeted $1.85, or 2.5%, to settle at $78.70 a barrel, while U.S. West Texas Intermediate crude futures fell $2.03, or 2.7%, to $73.82.

ensions in the Middle East have recently boosted oil prices. Worries persist over attacks by Yemen-based Houthi forces on shipping in the Red Sea that are driving up costs and disrupting global oil trading.

The Houthi group also said it would keep up attacks on U.S. and British warships in what it called acts of self-defense.

Meanwhile, BP Plc (BP.L), opens new tab said it was in the process of shutting down its 435,000 barrel-per-day (bpd) Whiting, Indiana, refinery after a power outage. The City of Whiting said the power outage prompted visible flaring as products were burned off.

Earlier, two OPEC+ sources said the group would decide in March whether or not to extend voluntary oil production cuts in place for the first quarter, after a ministerial panel meeting made no changes to the group’s output policy.

OPEC+ currently has 2.2 million barrels per day (bpd) of voluntary oil production cuts, announced in November.

Supporting prices this week, Federal Reserve Chair Jerome Powell on Wednesday said interest rates had peaked and would move lower in coming months, with inflation continuing to fall and an expectation of sustained economic growth.

Lower interest rates and economic growth help oil demand.

Powell declined to promise that rate cuts would come as early as the Fed’s March 19-20 meeting, as investors had hoped.

The U.S. also released on Thursday data showing worker productivity grew faster than expected in the fourth quarter, keeping unit labor costs contained and giving the Fed another boost in the fight against inflation.

U.S. manufacturing stabilized in January amid a rebound in new orders, but inflation at the factory gate picked up.

The Institute for Supply Management (ISM) said on Thursday that its manufacturing PMI increased to 49.1 last month, while economists polled by Reuters had forecast the index dipping to 47.0.

“Data from ISM came in stronger than expected, which is good for oil demand and supportive for prices,” said Phil Flynn, an analyst with Price Futures Group.

In China, the world’s second-biggest economy, leaders revealed new support measures to help to cushion fallout from the liquidation of property developer Evergrande (3333.HK), opens new tab.

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Analysts at JPMorgan said they expected China to remain the single largest contributor to global oil demand growth in 2024, forecasting that Chinese demand would increase by 530,000 bpd, having jumped by 1.2 million bpd last year.




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