Oil prices continued to drop on Thursday as Saudi Arabia might shift away from its unofficial price target for crude in anticipation of increased output.
This move dampened market sentiment, overshadowing positive signs from stronger U.S. fuel demand and decreased oil inventories.
Moreover, concerns about global demand, particularly in China, along with the possible return of Libyan oil to the market, further pressured prices. While China has introduced some easing measures, further fiscal stimulus may be needed to support household spending and stimulate economic growth.
The broader outlook for the oil market remains uncertain due to weak demand from major global economies. Geopolitical tensions in the Middle East have further heightened concerns of a potential conflict that could disrupt oil production. However, a cease-fire could wait on the market.
This uncertainty poses a significant risk to crude prices, as any disruption in supply from this critical region could trigger a price spike. However, with demand still lagging globally, the market may struggle to find stability, leading to potential volatility in crude prices.
Looking ahead, market participants will closely monitor key U.S. economic data that could influence crude prices. The U.S. GDP is projected to grow by 3% in Q2, compared to 1.4% in Q1, but if the actual figures fall short of expectations, it could further weigh on oil prices.
