- The oil prices are trading in a 60-pips range in early Tokyo.
- Policy tightening by the Western leaders has triggered recession fears in the world economy.
- China has increased its oil imports from Russia significantly.
West Texas Intermediate (WTI), futures on NYMEX, is juggling in a narrow range of $108.25-108.85 in the Asian session. The black gold is not performing well after the world central banks started elevating their interest rates vigorously due to intense price pressures. To tame the galloping inflation, it looks like a rate hike by 50 basis points (bps) is the new normal. Various central banks have sounded hawkish and the mighty Federal Reserve (Fed) went beyond the paragraph and announced a rate hike by 75 bps.
The higher extent of rate hikes by the central banks is opening doors for a recession in the world economy. Higher interest rates will squeeze liquidity from the market and the corporate sector will leave with lower capital and that too is an expensive one. This will force the corporate to invest in projects with more filters due to the unavailability of helicopter money. Eventually, the aggregate demand will witness a major slump and therefore the oil demand will fall significantly.
On the supply side, supply constraints will continue to remain steady as gauging an alternate for oil imports from Russia is not a cakewalk. Many economies have decided to prohibit oil from Russia despite naming the alternate oil suppliers to address the required demand.
Meanwhile, oil imports in China from Russia have soared dramatically. The economy has recorded a 55% addition in the oil imports in May.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.