May 8, 2024 (Investorideas.com Newswire) Crude oil continues its steep declines today across both major benchmarks, Brent and WTI, which were down approximately 1.5% at approximately 9:15 a.m. GMT.
The decline in oil today comes with the continued interaction with negative data about US oil inventories and discouraging expectations for supply and demand this year, in addition to the downplaying of the importance of military developments in the Middle East, which constituted the most important factor in supporting prices.
Yesterday, we witnessed a turbulence in the military scene, after a rollercoaster of news and counter-news about reaching the truce agreement in Gaza, with the sudden entry of Israeli ground forces and their control of the Rafah Crossing.
It later appeared that this step comes within the framework of a precise operation and will not expand into a large-scale ground one, and this is what regional and international actors warn against, in conjunction with the continuation of negotiations.
In other words, what Israel is doing now comes within what may be "negotiating under fire" in order to obtain the greatest possible gains, in addition to presenting a media show that serves the interests of the war government and pleases the far right, which is pushing towards expanding the war. In return, the United States suspended a shipment of heavy munitions in response to that move.
This narrative gives energy markets comfort that the region will not actually be dragged into a wider war and that calm may actually emerge in the end, and this explains the negative reaction to successive news since yesterday.
Therefore, I believe that the markets' concerns about the safety of global energy supplies may dissipate more and more in the coming days, as the specter of a widespread regional war recedes.
What made matters worse for the oil markets were the discouraging numbers regarding the decline in demand, prices, and growth in supply. The Energy Information Administration lowered its expectations for global demand for crude by 0.1% this year, in addition to raising expectations for global oil production, led by countries outside OPEC, by 0.1% as well.
Oil inventories also accumulated unexpectedly last week in the US, according to the American Petroleum Institute (API), with an increase of half a million barrels.
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