Oct 21, 2022
VOT Research Desk
Market Insights, Considerations & Analytics
Friday saw little change in oil prices as the market once more considered the impact that rapid increases in interest rates would have on energy consumption and as optimism about a possible rise in demand in China waned.
By 06:25 GMT, Brent crude futures had lost 12 cents to $92.26 per barrel. The price of a barrel of U.S. West Texas Intermediate futures dropped by 11 cents to $84.40.
Following a rollover in front-month contracts, Brent was on track for a weekly gain of 0.6 percent, while WTI was anticipated to fall 1.5 percent.
Patrick Harker, president of the Federal Reserve Bank of Philadelphia, stated on Thursday that the United States Federal Reserve will continue to raise its short-term rate target in an effort to combat inflation.
It blunted optimism from China’s reduced quarantine hopes with several key Fed members taking turns at the hawk’s pulpit this week arguing for even higher interest rates.
We are not there yet,” although “everyone is pining for a China-reopening-driven commodity boost.
According to sources familiar with the situation, Bloomberg news reported on Thursday that Beijing is considering reducing the 10-day quarantine period for visitors to seven days. Beijing has not provided any official confirmation.
This year, China, the largest crude importer in the world, has adhered to strict COVID-19 restrictions, putting a strain on business and economic activity and lowering fuel demand. The zero tolerance policy, according to many analysts, will largely continue into the coming year.
However, the output cut from the Organization of the Petroleum Exporting Countries and allies, including Russia, known as OPEC+, as well as the impending ban on Russian crude and oil products by the European Union have recently supported oil prices.
The oil market may experience a major shift as a result of OPEC’s decision to reduce production by two million barrels per day. According to ANZ Research in a note released on Friday, “it could tighten the market with the risk of Russian supply disruptions due to the price cap.
“The oil market is fundamentally in a stronger position than it has been in previous economic downturns,” although “key headwinds include a slowing global economy and sustained soft demand from China.
The White House asserted that Saudi Arabia had coerced other OPEC+ members into agreeing to the 2 million barrels per day reduction in production.
As interest rates rise, oil falls.
