Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil Tumbles 4%, Derailed by Biden Admin Deal That Blocked Rail Strike 

Published 16/09/2022, 05:48 am
Updated 16/09/2022, 05:48 am
© Reuters.

© Reuters.

By Barani Krishnan

Investing.com -- The Biden administration did not just snuff out this week’s rally in natural gas. It also pulled out the bottom from under the run-up in oil, with a tentative deal on Thursday to avert a railway workers’ strike that could have crippled the delivery of energy to homes in America.

A deal between major U.S. railroads and unions representing tens of thousands of workers was reached after about 20 hours of talks brokered by the administration, Labor Secretary Marty Walsh said. 

The strike would have further reduced coal stockpiles that had already been thinned by poor rail service, complicating the high dependence on this source of energy amid tightness in supply of competing fuels like oil and gas. Electricity shortages and sky-high prices in coal-dependent parts of the country would have been very likely.

Crude prices closed the day down almost 4%.

Natural gas lost almost 10%, rolling back everything it gained a day earlier, and more, on speculation that the railroad strike could happen by Friday. 

The labor deal that averted the strike also sent U.S. diesel and gasoline down by about 5%.

“This agreement saved the economy from further intensifying inflationary pressures and avoided the U.S. economy a daily economic hit of about $2 billion,” said Ed Moya, analyst at online trading platform OANDA. 

“Oil fundamentals are still mostly bearish as China’s demand outlook remains a big question mark and as the inflation-fighting Fed seems poised to weaken the US economy,” added Moya.

More than 60 million people in 33 cities across China have been placed under partial or full lockdowns, as authorities double down on stamping out coronavirus outbreaks.

New York-traded West Texas Intermediate, which serves as the U.S. crude benchmark, settled down $3.38, or 3.8%, at $85.10 per barrel, after a session low at $84.56. Just last week, WTI hit a seven-month low of $81.20, before returning to above $90 on Wednesday.

Brent, the London-traded global benchmark for oil, settled down $3.26, or 3.5%, at $90.84 per barrel, versus its intraday low of $90.05. Brent hit a January trough of $87.25 last week.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.