West Texas Intermediate Brent Crude Falls Below USD 80 Per Barrel Amid Fears of Slower Economic Growth in the United States and European Union
Earlier on Friday, the prices of Crude oil plummeted by 5 percent, with the U.S standard price dropping to its lowest since January due to concerning factors like the looming recession and slow economic growth.
On Friday, the West Texas Intermediate Crude slumped lower than the USD 80 per barrel mark and traded below USD 78.83 per barrel, down by 5.58 percent. The benchmark for brent crude was at USD 86.11 internationally, down 4.81 percent on the present day.
The nearest expiration date for the West Texas Intermediate agreement was directed towards a dip of a further 5 percent in the week, in the course of which the slow oil demand worries during the possibility of recession upstaged the escalating tensions between Russia and Ukraine.
The prices of oil rose early in the week when a partial mobilization of 300,000 men was mandated by Vladimir Putin in order to continue the ongoing war in Ukraine; since the second world war, this was the first mass draft in Russia. According to analysts, the words of Putin ordering the use of any means to protect Russia could be deciphered as nuclear weapons.
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However, the prices of oil dropped by the week ending due to the looming fear of an upcoming recession, with prominent central banks increasing the interest rates to counter inflation. The key rate was increased for the third time by another 75 basis points by the Fed during the week. Subsequently, the Bank of England hiked their rates by 2.25 percent, 50 basis points, the highest it’s been since 2008's financial crisis.
Head of Commodity Strategy at Saxo Bank, Ole Hansen, stated that during the meantime, crude oil followed a downward trend following the week spent constricted to corresponding tight range with the Putin versus Powell clash and not getting a final winner till Friday when West Texas Intermediate along with Brent dipped since FOMC induced recession increased. At the same time, the dollar and yields continued surging.
A challenging and possibly volatile quarter is expected, with several contrary uncertainties contributing to the situation. Hansen added that while the threat to growth is being assessed, the market has postponed the stress over the supply-reducing blow of an EU embargo on Russia's oil and fuel paired with a fragment turnaround of the 180 million barrels sold by the U.S from its Strategic Reserves.
According to the chief oil analyst at Energy Aspects Ltd., Amrita Sen, it will be an extremely volatile last quarter because of the several contradictory factors driving the prices presently.
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As per Procurement Resource, oil prices dipped by 5 percent compared to January, caused by slow economic growth and the looming recession. To counter the threat of inflation, many banks worldwide have increased their interest rates. It is expected that due to different factors contributing from contradictory sides, the final quarter will be extremely volatile.