Oil prices dropped following the release of disappointing economic data in the United States, indicating a possible slowdown in the economy. Brent crude futures fell 0.34% to $87.04 a barrel, while U.S. West Texas Intermediate crude futures dropped 0.38% to $83.56. Trading was light on the U.S. Fourth of July holiday.
The latest economic data revealed an increase in first-time applications for unemployment benefits and a rise in the number of people on jobless rolls. The ADP Employment report also showed that private payrolls increased by only 150,000 jobs in June, which was lower than expected. Additionally, the ISM Non-Manufacturing index fell to a four-year low in June, indicating a decline in activity within the services sector.
Despite this disappointing economic news, analysts suggested that the Federal Reserve may consider lowering interest rates to boost demand for oil and stimulate the economy.
ANZ Research analysts noted that recent data aligns with the Fed’s inclination to ease monetary policy, potentially leading to rate cuts in the future. This could help offset the slowdown in growth and support oil prices by increasing demand.
Overall, while oil prices may have dipped following weaker than expected U.S employment and business activity data, there is still hope that further actions from central banks could boost demand for oil and stabilize markets over time.
