Brent Crude Fell below USD 91.63/barrel Amid Economic Slowdown and Rising Interest Rate Fear
Bench Crude, the benchmark of oil prices globally, has put forth a trepid state for crude oil costs globally. The latest report has presented the horrid effect of economic recession on oil industries. Oil consumption has flumped significantly, substantiated by the palliation of imports in most countries that otherwise are significant importers.
China’s ‘Zero COVID-19 Policy’ seems to be one of the instrumental dynamics of this slouch in prices. Persistent lockdowns have been rampant on the fortune of crude oil costs. Hence slump in demand translates slump in prices. The worst part is the tenacity of the Chinese president, who doesn’t seem to change minds on uplifting the lockdown restrictions. Therefore, the demand for raw materials has extenuated.
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The International Energy Agency has stopped the activities considering oil demands and even its forecast for the coming two years. It heralds a severe economic recession ahead globally.
Latest Trends See a Plight for Oil Prices
If the recent report is observed, oil prices went down by a significant loss of 3%. The cost of oil barrels went down to USD 91.63 per barrel and incurred a loss of USD 2.94 – USD 3.91. In a similar pattern presaging loss of oil prices, the West Texas Intermediate futures went down to USD 85.61, incurring a loss of USD 3.5 – USD 3.9.
Although the Bent and WTI futures seemed mediocre on Friday, vacillating between the ups and downs, the prices went down again. It could be seen with the dip both reports presented: Bent- 6.5% and WTI- 7.6%.
OPEC’s Decision to Dissuade the Oil Market
As per IEA, OPEC- Organization of Petroleum Exporting Countries and Allies passed a decision to cut the production of 2 million barrels each day, which is remarkably lower than the target production.
This downhill production would add to the problems of the price of crude oil. It, resultingly, caused the USA and Saudi Arabia in a state of disagreement.
The USA Inflation Plays with the Price Trends
The USA is experiencing considerably high inflation compared to the last forty years. Thus, the interest rates are expected to rise. This, coupled with the bells ringing the advent of economic recession, has trampled upon the intent of purchase. When household items and daily uses experience inflation, purchase intent seemed to have jarred in a notable way.
The USA has been considering taking care of consumer sentiments. It would not only bring the economic recession emphatically but also increase the dollar’s value. An increase in the dollar’s value in an already devastating market assures the debacle in oil prices.
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A rise in the dollar’s value, that too, in the economic recession, would decrease the pressure on crude oil market prices. It translates to a dip in demand; hence situation doesn’t seem to ameliorate anytime soon. As per the latest report, the dollar value has surged by 0.8%, which is an alarming sign.