Oil prices took another nose dive on Thursday on the news that OPEC had refrained from cutting current oil production despite the recent decline in oil prices. The Brent oil price plunged below USD72/bl on Friday morning, leading to a total decline of USD43/bl since the peak in June. The signal from OPEC is clear: it does not want to bear the burden of adjusting production lower to allow for other countries outside OPEC to produce more. So, although the decline in prices is hit ting many OPEC countries, OPEC has chosen short-term pain for longer term gain as the price is now falling below the marginal cost of many oil investments in, for example, US shale industry.
The lower oil price is very good news for western consumers (see Strategy: Big drop in oil price to boost consumption, 21 November). In the US, gasoline prices this week fell below USD2.80 per gallon for the first time in four years and a similar development is being seen in Europe, although the weaker euro is dampening the decline. Other commodity prices – including food – are also falling and adding to the downward pressure on inflation.
The lower oil price is very good news for western consumers (see Strategy: Big drop in oil price to boost consumption, 21 November). In the US, gasoline prices this week fell below USD2.80 per gallon for the first time in four years and a similar development is being seen in Europe, although the weaker euro is dampening the decline. Other commodity prices – including food – are also falling and adding to the downward pressure on inflation.
Recommended Content
Editors’ Picks
EUR/USD holds below 1.0750 ahead of key US data
EUR/USD trades in a tight range below 1.0750 in the European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays firm above 156.00 after BoJ Governor Ueda's comments
USD/JPY stays firm above 156.00 after surging above this level on the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.