Brent crude futures slip amid easing Middle East concerns and U.S. job growth
Oil prices made a downward turn on Friday, spurred by easing Middle East supply concerns amidst the Israel-Hamas war and speculation of the US Federal Reserve halting interest rate hikes. Brent crude futures were recorded at $84.89 a barrel while West Texas Intermediate crude stood at $80.51 a barrel, marking a weekly drop exceeding 6%. Despite warnings of potential wider conflict at Lebanon’s border with Israel by Hezbollah leader Sayyed Hassan Nasrallah, markets remained steady. John Kilduff of Again Capital LLC stated that this conflict seems unlikely to significantly disrupt demand or supply.
The slower-than-expected US job growth in October and cooled wage inflation suggest softer labor market conditions, reducing the need for further Fed rate hikes. Meanwhile, the Bank of England maintained its 15-year peak rates, fostering some risk appetite. However, China's services activity showed only modest expansion in October as sales growth hit a 10-month low and employment stagnated due to declining business confidence.
Turning to South Africa, World Bank forecasts indicate that barring geopolitical escalations, fuel prices should remain stable during the festive season. This prediction is tied to an average global oil price of $90 per barrel in Q4, influenced by a drop in Brent crude prices from $91.86 to $88.72 per barrel due to a slowdown in global economic growth and increased production from non-OPEC+ producers.
The recent minor R1.78 per liter cut in petrol prices driven by increased global oil inventories and the lifting of US sanctions on Venezuela is expected to eventually benefit both the logistics supply chain and retail pricing. However, consumers find this cut inadequate given the current prices of R23.90 per
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