U.S. oil slumps 5%, approaching the $80 mark as recession worries re-emerge

time:2022-12-09 14:34:23source:chakarski.com author:Individual stock recommendation
U.S. oil slumps 5%, approaching the $80 mark as recession worries re-emerge

Even if OPEC+ defended oil prices on Monday with a symbolic output cut, it would be difficult to resist the current slump in oil prices. This Wednesday, as recession fears resurfaced, the superimposed U.S. dollar index hit a two-year high, putting pressure on commodities, and oil prices fell again. In addition, the expectation of "hawkish" interest rate hikes in Europe and the United States intensified the market's worries about economic recession, causing oil prices to remain sluggish. In the United States, Brainard, the Fed's "second-in-command" vice-chairman, stressed overnight that he would keep raising interest rates to subdue high inflation; the New Federal Reserve News Agency issued a document saying that the Fed may raise interest rates by 75 basis points again in September. In Europe, money markets are still pricing in a 65% chance that the European Central Bank will raise interest rates by 75 basis points this week, despite increasingly dire economic conditions. In addition, the Fed's Beige Book, which shows the current state of the regional economy, said that the U.S. economic growth outlook remains weak and is expected to cool further next year, with inflationary pressures continuing at least until the end of the year. Brent crude fell 4.6% to $88.5 a barrel, hitting a seven-month low and falling below $90 a barrel for the first time since February. WTI crude fell 5.2% to $82.37 a barrel, the lowest level since January this year. According to the media, Stephen Brennock, an analyst at oil broker PVM, said: Due to soaring inflation and the impact of interest rate hikes on consumption, the economic recession is getting closer and closer to the West... The market infers that OPEC+ production cuts mark the demand outlook deterioration. Analysts at research firm Oillytics see a strong dollar "remaining a major headwind for most commodities," adding: "Any price rally will continue to spark a sell-off, with OPEC+ cuts being ignored." Wall Street News previously mentioned that Europe's emergency measures to deal with the energy crisis and the ongoing Iran nuclear talks are also key factors to suppress oil prices. EU energy ministers will meet on Friday to discuss emergency measures to deal with soaring gas and electricity prices, possibly considering a price cap on imported gas and a price cap on gas used for power generation. Following Germany's release of 65 billion euros to fight the soaring energy bills, the British female prime minister will spend 130 billion pounds in energy subsidies to help companies and households cope with high energy bills, all of which may squeeze crude oil prices. pressure. Negotiations on the Iran nuclear deal are underway. Once reached, as many as 93 million barrels of Iranian oil will flood the market, and oil prices may face downward pressure. Weak oil prices also eased energy tensions in the United States. After topping $5 a gallon in June, the average U.S. gasoline price has fallen rapidly to $3.76 a gallon in recent weeks, giving the Biden administration a breather. This article is from Wall Street News, welcome to download the APP to see more
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