Oil rises, driven by global recession fears
Amman Today
publish date 2022-07-06 09:21:19
Jordan word
Oil prices rose on Wednesday, after yesterday’s drop, although the euro remained at a 20-year low as fears of a possible global recession continued to prevail.
oil prices
Brent crude futures rose 1.18% to record $103.96 a barrel, while US West Texas crude contracts fell 0.533% to $100.03 a barrel, at the time of writing this report.
The two major crude contracts were hit yesterday as investors grew worried that leading economies would shrink this year or next due to sharp interest rate hikes from the central bank aimed at combating decades-old high inflation.
The main US contract, West Texas Intermediate crude, fell by about 9% below $100 a barrel for the first time since April, while Brent crude fell by about 10% on expectations that any recession would affect demand, despite the lack of supplies caused by the Russian-Ukrainian war. .
potential drop
Citigroup reported in a note that the recession could drive prices down to $65 a barrel this year if OPEC and other major producers don’t step in to provide support and companies don’t invest.
However, Goldman Sachs said it believes the commodity will remain elevated, as it is too early for the oil market to succumb to such concerns.
Europe also faces an energy crisis stemming from sanctions on Russian fuel, while a workers’ strike in Norway threatens to further damage supplies. The strike is expected to cut oil production by 89,000 barrels per day and gas production by as much as 27,000 barrels per day.
raise interest rates
Analysts’ expectations are that falling oil prices and the possibility of a recession may give central banks room to ease monetary tightening, which could provide some relief for stocks.
It is noteworthy that the stock market was mixed in volatile trading yesterday, with investors returning from the weekend facing renewed fears of a looming global recession, especially amid warning signs in the bond market with the closely watched yield curve inversion.
The Euro also remained under pressure and appears to be heading towards parity with the Dollar after hitting a 20-year low due to the European Central Bank’s decision not to raise interest rates until this month, lagging the pace of the Fed’s rapid increases that lifted the Dollar.
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Jordan Business
Source : ألدستور