Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Oil Prices Tread Water Between Tightening Supply, Recession Fears

Commodities Oct 18, 2022 13:40
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
LCO
-1.30%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
-2.01%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Ambar Warrick

Investing.com-- Oil prices were muted on Tuesday as markets weighed signs of tightening crude supply against increasing fears that a global economic slowdown will erode crude demand this year.

Crude markets marked a slow start to the week, retaining most of last week’s losses amid growing signs that the United States will enter a recession within the next 12 months, according to Bloomberg economists.

The dismal forecast comes amid rising inflation in the country, with steep interest rate hikes by the Federal Reserve having done little so far to soothe price pressures.

London-traded Brent oil futures were little changed around $91.93 a barrel on Tuesday, while U.S. West Texas Intermediate crude futures rose 0.3% to $84.75 a barrel by 21:53 ET (01:53 GMT). Both contracts moved little on Monday.

Concerns over future Chinese demand weighed, after President Xi Jinping signaled that the country has no plans to scale back its strict zero-COVID policy. A string of lockdowns and curbs under the policy have severely hampered Chinese economic activity this year, denting crude demand in the world’s largest oil importer.

But the Chinese government outlined more spending measures to support the economy, a move that could spark a recovery in local commodity demand. The People’s Bank of China also maintained interest rates on Monday, showing that it intends to keep monetary policy accommodative for the time being.

Members of the Organization of Petroleum Exporting Countries and its allies (OPEC+) recently voiced their support for a 2 million barrel per day production cut by the cartel. The cut, which was announced earlier this month, is intended to help stabilize oil prices after they plummeted from annual highs.

The U.S. criticized the cut and also released more supply from its Strategic Petroleum Reserve (SPR) to limit gains in crude prices. The world’s largest economy is struggling to cope with inflation reaching 40-year highs, largely in part due to fuel prices.

The Federal Reserve is expected to keep raising interest rates at a fast pace to combat inflation, a move that is expected to boost the dollar and weigh on oil markets. Rate hikes are also expected to cool global economic growth, which is a negative signal for crude markets.

On the other hand, an escalating conflict between Russia and Ukraine could disrupt crude supplies from Moscow. A harsher-than-expected European winter could also push up oil demand, particularly for heating purposes.

Broader market sentiment also improved after the UK government withdrew a controversial tax cut plan, abating fears of a debt crisis in the country.

Oil Prices Tread Water Between Tightening Supply, Recession Fears
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email