Oil: Market evaluation

Crude oil prices fell as much as 9% in the week as oil markets saw their biggest plunge since April on growing fears of a recession in the United States amid rising interest rates by the Federal Reserve. positive rate to curb inflation at its highest level in 40 years.

The price of US crude oil traded in New York, the standard for US crude oil, decreased by 7.11 USD, or 6%, at 110.48 USD / barrel. During the week, WTI has dropped nearly 9%, the first weekly decline since April.

Brent crude oil traded in London, the global oil standard, fell $ 6.2, or 5.1%, at $ 113.61. During the week, Brent fell more than 7% for the first drop week in two months.

WTI rallied earlier this week to a three-month high of $ 123.18, the highest since March to nearly $ 130 after the start of the Russia-Ukraine conflict. Brent reached $ 125.16, after the peak in March, the highest level in 14 years.

Technical analysts have warned for weeks that WTI and Brent oil prices have been overbought as both standard crude contracts have hit around $ 20 each over the past eight weeks. The market appeared to have heeded the warning Friday after U.S. factories' output fell for the fifth month in a row, as companies grappling with supply chain bottlenecks and high costs. , despite rising industrial output.

Meanwhile, the Head of Federal Reserve Division in Minneapolis, Neel Kashkari, warns that the central bank may need to be more aggressive with interest rates if US inflation does not retreat from a four-decade high. century.

It is a sign that a 3/4 point gain in June - the biggest in 28 years - could be followed by more larger rallies, though Fed Chairman Jerome Powell assured earlier this week that There won't be any more super big hikes this year and that real rate cuts could come as early as 2024.

The US economy showed a negative growth of 1.4% in the first quarter. If it fails to return to positive by the second quarter, technically the United States will fall into a recession.

"Recessions are increasingly likely to happen as central banks race to raise interest rates significantly before inflation spikes out," said Craig Erlam, an analyst at online exchange OANDA. control". The European Central Bank also accounts for three major rate hikes as well in 2022.

While the world, especially the United States, has yet to be in an environment of stagnant inflation where prices continue to rise while the economy continues to decline, the term has "been referred to too much in the In recent months, this is probably highlighting the turmoil surrounding it, "said Erlam.

While the war in Ukraine and subsequent Western sanctions on major energy exporter Russia have exacerbated the global scarcity of crude supplies, oil prices have risen during the year. This is beyond the affordability of many poor consuming countries, analysts said.

Previous Post Next Post

Recent in Sports

Join our Team