Oil Prices Start The Year In Red

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Oil Prices Start The Year In Red

Oil Prices Start The Year 2024 In Red Amid Supply Concerns

The first day of 2024 was not so fortunate for the oil as it remained under pressure. From supply disruptions in the Red Sea to lower chances of rate cuts, things look unsuitable for oil in 2024.

Brent Crude Oil can be seen at around $75.89 with a decline of -$1.15. Similarly, its US counterpart (WTI) closed the day at about $70.83, dropping almost $1.27.

Stronger Dollar And Fed Uncertainty

The primary reason behind the decline in oil prices (spot & and future) is the Fed's interest rate situation in 2024. From talks of early rate cuts to comments of no rate cuts in the short term, the market needs clarification!

For those who don't understand the relationship between oil & and interest rates, it has to do with consumer demand. Lower interest rates will boost economic activities, which will, in turn, increase the oil demand.

Another thing that is making things difficult for the oil prices is the greenback strength. In addition, the US stocks are also under pressure, which is also a factor behind negative price pressure in oil. Simply put, a stronger greenback (USD) can make it difficult for investors to buy oil using foreign currency.

$2 upside was seen in the oil prices after the Red Sea incident. But now, the effects of temporary supply disruption have gone out of the window as the oil market shows signs of correction.

Despite all of this, the fact remains undisputed is that oil is still running our modern economy. Although the shift to green energy has picked pace, more is needed to replace oil as the primary engine of the world's economy.

Against this backdrop & and the upcoming supply cuts, oil prices will likely turn higher during the rest of 2024.

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