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The ‘R’-Word Rules as U.S. Crude Below $80 for Worst Week in 7 By Investing.com


© Reuters.

By Barani Krishnan

Investing.com – It’s back, the buzzword most hated by oil longs.

Recession, or the ‘R’ word as it has come to be known, was omnipotent in commodity markets on Friday, sending gold to its 2½-year low while ‘black gold’, or oil, delivered its worst weekly loss in seven years. while US crude fell below $80 a barrel for the first time since January.

Global equities at two-year lows, 20-year highs, weak European purchasing managers’ indices and worries about this week’s rate hike growth made it a perfect storm for oil bulls.

“The market is clearly thinking of an economic slowdown,” said Scott Shelton, an energy futures broker at ICAP in Durham, North Carolina.

“Whether or not physically” [oil] numbers are strong or weak things that are not currently,” Shelton added, citing warnings from analysts long-held that the risk of escalating the war in Ukraine from Russia and China’s opening up of COVID lockdowns will benefit greatly in the coming weeks. could mean for oil.

New York-traded, which serves as the US crude oil benchmark, fell $5.24 or 6.3% to $78.25 a barrel at 12:45 ET (4:45 GMT). WTI previously fell to a session low of $78.14.

“WTI is approaching the 100-week SMA of $77.50 with today’s low of $78.22,” said Sunil Kumar Dixit, chief technical strategist at SKCharting.com, referring to the Simple Moving Average of US crude. “An additional decrease outside the support is not excluded.”

For the week, WTI fell 8%, heading for the worst week since late July.

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the London-traded global benchmark for oil fell $4.88, or 5.4%, to $85.58, from its intraday low of $85.51.

For the week, Brent was also off by about 5%, heading into the worst week since late August.

“Central banks now seem to accept that a recession is the price to pay to get a grip on inflation, which could weigh on demand next year,” said Craig Erlam, an analyst at online trading platform OANDA.

“At the same time, the market remains tight and OPEC+ is perfectly prepared to further restrict supply, even if it does not meet the quota it has set itself so far. Moreover, a nuclear deal between the US and Iran does not seem any closer and The mobilization of Russia could pose a risk to its supplies.”

Given all of these, “very little is probably priced in right now,” Erlam added.

The European Union on Thursday stepped up plans to put a cap on the price of Russian oil — a measure designed to weaken Moscow’s ability to fund the war in Ukraine.

Nigerian Oil Minister Timipre Marlin Sylva spoke on behalf of the producer alliance OPEC+, meanwhile threatening a cut in global crude oil production if prices continued to fall.

Neither announcement had much of an impact on the market.

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