- Oil prices have failed to surpass the critical hurdle of $107.23 amid escalating recession fears.
- Higher interest rates by the global central banks have raised the oil demand worries.
- The EIA weekly oil inventory report is postponed to next week, as reported by Bloomberg.
West Texas Intermediate (WTI), futures on NYMEX, is portraying a mute performance in the Asian session after sensing significant offers while overstepping the critical hurdle of $107.23. The black gold has remained in the grip of bears this week after the market participants underpinned the demand worries over the supply constraints.
No doubt, the sanctions on Russia after it invaded Ukraine have settled a tight oil market for the global economy for a prolonged period. However, the recently grown recession fears after the global central banks started running towards policy tightening measures to fix the inflation mess are guiding the oil prices now. In June, most of the Western central banks announced a rate hike of 50 basis points (bps). The mighty Federal Reserve (Fed) went beyond the expectations and announced a 75 bps rate hike.
The announcement of higher interest rates has eventually slashed the extent of economic activities whose effect is clearly visible on the US Purchase Managers Index (PMI) numbers. The Manufacturing PMI has landed at 52.4 much lower than forecasts and the prior print of 56 and 57 respectively. Also, the Services PMI has slipped sharply to 51.6 from the consensus of 53.5 and the prior print of 53.4. Lower economic activities will result in lower demand for oil and henceforth lower oil prices.
Volatility has been accelerated in the oil counter amid a surprise delay in the weekly U.S. oil inventory report, which Bloomberg said was held up by “power issues” and unlikely to see publication until next week.
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