On Thursday, July 4, 2024, oil prices dropped after the release of weaker-than-expected U.S. employment and business activity data, suggesting a potential slowdown in the U.S. economy, the world’s largest oil consumer.

Brent crude futures were down 30 cents, or 0.34%, at USD 87.04 a barrel, and U.S. West Texas Intermediate (WTI) crude futures fell 32 cents, or 0.38%, to USD 83.56 by 0030 GMT, due to reduced activity during the U.S. Fourth of July holiday, that is the U.S. Independence Day.

Recent data in the U.S. showed an increase in first-time applications for unemployment benefits, a rise in the number of jobless individuals, and slower growth in private payrolls. The ISM Non-Manufacturing Index, a measure of U.S. services sector activity, decreased to a four-year low in June.

Analysts believe the weaker economic data could prompt the Federal Reserve to consider rate cuts, potentially supporting oil markets by boosting demand.

ANZ Research analysts say, “The direction of recent data confirms the Fed’s easing bias. A slowdown in growth momentum will support disinflationary impulses in coming months, paving the way for the Fed to cut rates.”