Skip to content

Commodity investors nervous as crude oil buckles into recession

Commodity investors nervous as crude oil buckles into recession

(Bloomberg) — Oil fell for the second time in days on concerns that a global economic slowdown would eventually hit oil demand.

Read most from Bloomberg

West Texas Intermediate slipped to $104 a barrel. Investors are increasingly concerned about the impact of higher US interest rates and Federal Reserve Chairman Jerome Powell is due to testify before Congress on Wednesday on his bid to halt inflation at the fastest rate in decades. Inflation continues to rise outside the US as well, with UK prices reaching a new 40-year high.

Since Russia’s invasion of Ukraine, oil markets have been grappling with a liquidity crisis with futures holdings falling to their lowest levels since 2016, threatening outbound volatility in headline prices. The US crude benchmark also fell below its 100-day moving average on Wednesday for the first time since January, adding to technical pressure in an already fragile market.

While crude oil has been volatile over the past week, down 6.8% on Friday, there has been some respite from tightness in refined fuel markets. US President Joe Biden will call for a gasoline tax holiday, a person familiar with the plan said, with the average US retail price rising above $5 a gallon this month after a more than 50% increase in 2022.

Oil is heading for its first monthly loss since November as worries about an economic slowdown offset the fallout from the war in Ukraine. Super major Exxon Mobil Corp warned this week that crude markets could remain tight for years, while the world’s largest independent oil trader Vitol Group flagged rising fuel demand in China. Also, rising margins are offering refineries an incentive to buy every barrel of crude.

“The recent broader macro impacts are deciding price direction for oil,” said Warren Patterson, Head of Commodity Strategy at ING Grop NV in Singapore. “However, fundamentally the market still remains constructive. Oil balances are set to tighten for the rest of the year, while strong refinery margins in the short term should be supportive of crude demand. ,

Wednesday’s decline came as other commodities also lost ground, as well as riskier assets more broadly. Both copper and iron ore declined, as did equities. An additional headwind for crude oil prices has come from the rising dollar, which makes imports more expensive for holders of other currencies.

“Investors should remember that a Fed-induced recession is not the only symptom — inflation — and the cure to the problem is underinvestment,” Goldman Sachs Group Inc. said in a note.

Read most from Bloomberg Businessweek

©2022 Bloomberg LP

credit source

Commodity investors nervous as crude oil buckles into recession

#Commodity #investors #nervous #crude #oil #buckles #recession

if you want to read this article from the original credit source of the article then you can read from here

Shopping Store 70% Discount Offer

Leave a Reply

Your email address will not be published.