Oil prices drop on Gaza ceasefire hopes

Oil prices closed lower on Friday as the possibility of a ceasefire in Gaza took center stage, overshadowing strong summer fuel demand and potential supply disruptions from Gulf of Mexico hurricanes. Brent crude futures ended the day 1.02% lower at $86.54 a barrel, while U.S. West Texas Intermediate (WTI) crude futures settled at $83.16 a barrel, down 0.9%. Despite this, Brent saw a 0.4% increase for the week, and WTI futures rose by 2.1%.

Efforts to secure a Gaza ceasefire and negotiate a hostage release continue, though challenges persist. A breakthrough in the Middle East conflict could reduce the risk premium on oil from the region, impacting global oil prices. In the U.S., robust summer oil demand has been a key driver of recent price hikes, buoyed by the aftermath of Hurricane Beryl.

The U.S. Energy Information Administration reported a significant 12.2 million barrel draw in inventories last week, surpassing analyst forecasts. Hurricane Beryl, a Category 2 storm, made landfall in Mexico after wreaking havoc in the Caribbean. While Mexico's oil platforms are expected to remain unscathed, U.S. oil operations in the storm's path may encounter disruptions.

Speculation surrounding potential U.S. interest rate cuts has also influenced oil demand projections. Recent employment data indicating a slight slowdown in job growth and a rise in the unemployment rate could prompt a rate cut at the upcoming July meeting, potentially stimulating economic activity and crude oil demand.

As oil prices fluctuate amidst geopolitical developments and weather-related risks, the global energy landscape remains dynamic. The interplay between regional conflicts, natural disasters, and economic policies underscores the intricate nature of the oil market. Stay informed to grasp how these factors shape the prices at the pump and impact daily life.