Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

Oil: The 'R'-Word Rules as U.S. Crude Below $80 for Worst Week in 7

Commodities Sep 24, 2022 01:28
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
LCO
+0.66%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
+0.75%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DXY
-0.30%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

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 across commodity markets on Friday, sending gold to 2½-year lows while setting up 'black gold', or oil, for its worst weekly loss in seven as U.S. crude broke below $80 per barrel the first time since January.

Global equities at a two-year low, the dollar at 20-year highs, weak European purchasing managers indexes, and growth concerns from this week's rate hikes by the Federal Reserve to the Bank of England made it a perfect storm for oil bulls.

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

"Whether or not physical [oil] grades are strong or weak matters not currently," Shelton added, referring to warnings from long-leaning analysts that risk of war escalation in Ukraine by Russia and China's opening up from COVID lockdowns could mean plenty of upside for oil in the coming weeks.

New York-traded West Texas Intermediate, which serves as the U.S. crude benchmark, was down $5.07, or 6.1%, to $78.42 per barrel by 10:55 ET (14:55 GMT). WTI earlier sank to a session low of $78.22.

For the week, WTI was down almost 8%, heading for its worst week since the end of July.

Brent, the London-traded global benchmark for oil, was down $4.72, or 5.1%, to $85.85, versus its intraday low of $85.51.

For the week, Brent was also down about 5%, heading for its worst week since the end of August.

"Central banks now appear to accept that a recession is the price to pay for getting a grip on inflation, which could weigh on demand next year," said Craig Erlam, analyst at online trading platform OANDA.

"At the same time, the market still remains tight and OPEC+ is perfectly willing to restrict supply further even as it fails to deliver on quotas it has set itself so far. What's more, a nuclear deal between the US and Iran looks no closer and Russia's mobilization could pose a risk to its supply."

Considering all these, "very little is probably priced in at this point," Erlam added.

The European Union ratcheted up, on Thursday, its plans to put a cap on the price of Russian oil -- a measure aimed at weakening Moscow's ability to fund the war in Ukraine.

Nigeria's Oil Minister Timipre Marlin Sylva, speaking on behalf of producer alliance OPEC+, meanwhile, threatened a cut in global crude output if prices continued to fall.

Neither announcement made much of an impact on the market.

Oil: The 'R'-Word Rules as U.S. Crude Below $80 for Worst Week in 7
 

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